Fiscal Oversight

The Division of School Business (Division) provides central support and coordination of the Department's fiscal oversight for all state and federally funded programs that are administered by the North Carolina Department of Public Instruction. Fiscal oversight occurs through subrecipient fiscal monitoring, audit resolution, training, and technical assistance.

Tab/Accordion Items

The Division monitors the expenditures of state and federal grant subrecipients for compliance with various fiscal requirements. The Division conducts on-site fiscal reviews of federal grant subrecipients to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements. Review of state and local fund use for appropriateness and adherence to regulations is integrated into the on-site federal fiscal monitoring process where specific concerns regarding use of public funds exists or where the federal portion is nominal to total public funds received by the subrecipient.

As part of its subrecipient monitoring functions, the Division reviews the annual audited financial statements for federal and state grant subrecipients that receive grants through DPI. The audit resolution process is designed to ensure that all grants are used for authorized purposes, in compliance with state and federal statutes, regulations, and the terms and conditions of grant awards, pursuant to Title 2 of the Code of Federal Regulations (CFR), 200.331, the North Carolina Local Government Budget and Fiscal Control Act, Chapter 159, Article 3 and the North Carolina School Budget and Fiscal Control Act, Chapter 115, Article 31.

Corrective actions can be imposed by DPI when organizations fail to comply with the terms and conditions of state and federal grant programs. The purpose of the corrective action is to ensure that deficiencies are remedied and corrective action occurs to correct the noncompliance.

Noncompliance may be identified as a result of audit findings or a fiscal monitoring review, or other means. Once identified, the appropriate fiscal monitoring report or audit determination letter will include detailed description of the areas of noncompliance; the required corrective action, including any enforcement actions; and the required completion date.


Types of noncompliance may include, but are not limited to, the following:

  • Expenditure of funds or conduct of activities that are not in accordance with the grant's authorizing statute, regulations, guidelines, or approved application.
  • Findings in a single audit conducted by an independent auditor.
  • Failure to comply with federal maintenance of effort requirements under the Individuals with Disabilities Education Act or the No Child Left Behind Act of 2001 (NCLB).
  • Failure to comply with:
    • One or more of the provisions and assurances in the grant application
    • Programmatic or fiscal reporting requirements
    • Previous required corrective actions, refund requests, or special conditions.

Corrective Action

To complete a corrective action, the entity must demonstrate that it has corrected the activity that was the cause of the noncompliance by providing specific documentation that supports the completion of the corrective action.

Details regarding submission of the required documentation to be submitted to the Monitoring and Compliance Section will be included in the audit determination letter, fiscal monitoring report or notification of noncompliance.

Enforcement Actions

DPI may impose an enforcement action as part of a corrective action or for noncompliance with a previous corrective action. Title 2 of the Code of Federal Regulations (CFR), 200.338, authorizes DPI to impose these enforcement actions. Enforcement actions may include the following:

  • Temporarily withhold cash payments pending correction of the deficiency or more severe enforcement action.
  • Disallow all or part of the cost of the activity or action not in compliance.
  • Wholly or partly suspend or terminate the federal award.
  • Initiate suspension or debarment proceedings.
  • Withhold further federal awards for the grant.
  • Take other remedies that may be legally available.


If corrective action requires repayment of federal funds, a refund form will be included with the notification letter. Complete the required fields on the form and submit both the form and the refund, paid by check from local funds to:

Attn: Monitoring and Compliance Section
Division of School Business
Department of Public Instruction
6334 Mail Service Center
Raleigh, NC 27699-6334

Failure to Comply

Failure to complete the corrective actions in a timely and adequate manner by the deadline provided can result in the agency taking further enforcement actions against an organization as described above. See 2 CFR 200.338 for more information.

Appeal Process

If DPI takes action against the subrecipient, the management determination letter or report will advise the entity that the determination shall become final unless timely notice of appeal is filed in accordance with G.S. 150B, Article 3.

To appeal, the entity must submit a written petition for a contested case hearing with the Office of Administrative Hearings within 60 days of the date of the action being appealed. A copy of the petition for a contested case hearing must also be served on the General Counsel and agent for service of process for the North Carolina Department of Public Instruction.

The request for hearing will be considered filed at the time it is received by the North Carolina Office of Administrative Hearings.