EXECUTIVE SUMMARY:
This final report points out that North Carolina claimed unallowable costs of approximately $48.2 million for child care under Title IV-E Foster Care and Other grants from October 1, 1993 through October 31, 1997. In general, we found that a consultant hired by the State did not properly determine the allowability of claims before assigning them to Title IV-E and Other Grants child care and the State did not adequately review the claims before submission to the Federal Government. In addition, the State's accounting system was not set up to identify which grant was used to pay for a child's care and the State did not maintain records that showed to which grant these payments were initially and subsequently assigned. In addition to a financial adjustment for $48.2 million, we recommended that the State develop accounting procedures that identify the grant used to pay for a child's care, maintain documentation to support eligibility for all child care claims for required periods, and monitor its consultants to ensure that only allowable child care claims are filed for Federal financial participation.