Year after year, state auditors have pointed to bookkeeping problems at North Carolina’s Department of Crime Control and Public Safety, an agency in charge of distributing homeland security and disaster recovery grants. But each year after returning to have a look at previously reported issues, the auditors had to append this statement to each one: “As of today, two years have passed since the audit report in which the finding occurred was submitted. The U.S. Department of Homeland Security is not currently following up on the audit finding.” That language is buried in mammoth annual reports known as “single audits,” routine financial inspections that states undergo to ensure they’re properly managing federal funds and to help guard against waste, mismanagement and fraud. But the Homeland Security Department’s failure to act on audit findings contained in the reports, which can include questionable payments that violate federal guidelines and may need to be returned, has been a deficiency for several of its preparedness grant programs. The understated remarks from auditors in North Carolina’s case seem to illustrate how much Washington is actually involved in policing the funds. Among other things, auditors concluded in 2008 that the state’s public safety department had devoted $200,000 more to administrative costs from one grant than rules allowed. “The department should institute controls to ensure that the administrative cap in not exceeded,” a report said. The feds have placed restrictions on the grants so that more money is available for things like training and equipment. But state and local grantees have long complained that the amounts they’re allowed to use for bureaucratic responsibilities aren’t enough. North Carolina officials disagreed with the finding arguing that the costs complied with program guidelines and were permitted by the Department of Homeland Security. But auditors had already made the same determination previously in 2007 when they questioned $20,000 worth of spending. The state called that a simple “classification” error. It happened the year before that, too, when auditors zeroed in on $170,000 that busted the administrative ceiling. That time the state forgot to assign the costs to a new fiscal year, officials countered. Reports contained multiple other findings. In one instance, hundreds of thousands of dollars in excess funds were accidentally drawn from the federal treasury and not returned until eight months later when the mistake was discovered, which led to the federal government losing out on $24,000 in interest. A similar erroneous drawdown occurred separately with $43,000. In another incident, standard reports prepared to show how much North Carolina had spent in a given year from sundry grant programs were variously under-and-over stated, sometimes by millions of dollars. The Homeland Security Department’s inspector general, Richard Skinner, paid a visit to North Carolina in 2006 for a look at its anti-terrorism grant spending. His office questioned $426,000 worth of expenditures for a number of reasons – equipment that wasn’t allowed (including a $460 subscription to satellite cable), purchases that couldn’t be explained with available documents and expenses shifted to the federal government that North Carolina had already accrued on its own, like a $13,000 hydraulic ram. The report also criticized a plague of staff turnovers at the state’s Division of Emergency Management, a weak accounting system and “significant cost overruns” associated with individual grant investments. State officials responded that they would investigate the questioned purchases and seek invoices from local governments to verify them. They also argued that some of the gear was permitted but simply wasn’t included in earlier budgets. State officials added that hiring personnel was based on what grants were available to cover them, so North Carolina had little choice but to rely in part on temporary and contract workers, which federal auditors said didn’t receive background verifications despite being exposed to “potentially sensitive information held in public trust.” When we submitted a request under the state’s open-records laws, authorities in North Carolina turned over a computer spreadsheet covering several years of grant spending. The file is available for download here in Excel format. It doesn’t offer rich detail as digital records in some other states do. But it’s still possible to get an idea of how much each community received year to year. Records show that North Carolina has invested significant resources in building a fusion center, which every state has established with the help of grants to collect and share intelligence on possible terrorist threats. Civil libertarians view them as a throw-back to ‘60s-era domestic police spying, however. The North Carolina Information Sharing and Analysis Center can access several law enforcement databases, and an October 2007 report from the federal Government Accountability Office described it this way: “[North Carolina’s fusion center] will enhance and facilitate the collection of information from local, state, and federal resources and analyze that information so that it will benefit homeland security and criminal interdiction programs at all levels. Specifically, [the center] develops and evaluates information about persons or organizations engaged in criminal activity, including homeland security, gang activity, and drug activity.”

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G.W. Schulz is a reporter for Reveal, covering security, privacy, technology and criminal justice. Since joining The Center for Investigative Reporting in 2008, he's reported stories for NPR, KQED,, The Dallas Morning News, the Chicago Tribune, the San Francisco Chronicle, Mother Jones and more. Prior to that, he wrote for the San Francisco Bay Guardian and was an early contributor to The Chauncey Bailey Project, which won a Tom Renner Award from Investigative Reporters and Editors in 2008. Schulz also has won awards from the California Newspaper Publishers Association and the Society of Professional Journalists’ Northern California Chapter. He graduated from the University of Kansas and is based in Austin, Texas.