Grants Management & Compliance FAQs
Grants Management & Compliance
NCEM currently manages over 20 major recurring federal and state emergency management grant programs throughout the organization, the majority of which are multi-year grants. Some of these grants require a disaster declaration, and some do not. These grant programs encompass myriad individual grant awards across numerous years currently being managed by NCEM through hundreds of different cost centers and financial accounts in the North Carolina Financial System (NCFS).
For example, federal Homeland Security grants typically have a three-year period of performance. That means a Homeland Security grant awarded by the federal government to NCEM on behalf of the state of NC in 2021 closes three-years later in 2024, effectively providing 3 years to spend the money awarded in 2021. If/when another federal Homeland Security grant is awarded to NCEM in 2022, that grant will close in 2025. This creates a loop of overlapping federal Homeland Security grants that must be carefully managed by NCEM.
The major emergency management grant programs currently managed by NCEM are summarized in the NCEM Portfolio of Grants table. This table is not intended to list every single grant program touching NCEM. Only the major recurring federal and state preparedness, recovery and mitigation grant programs currently being managed by NCEM are reflected in this table. As explained in FAQ # 1 above, these grant programs encompass myriad individual grant awards across numerous years currently being managed by NCEM.
Recipients/subrecipients of grant funds through NCEM are required to comply with all applicable federal, state, local and tribal laws and regulations, as well as all terms & conditions of the grant award. For grants that have a published Notice of Funding Opportunity (NOFO) announcement, this includes all requirements contained in the applicable NOFO. Grants awarded by NCEM will include a Memorandum of Understanding (MOA) or other written grant agreement executed with the award specifying the terms and conditions of the award. Refer to the NCEM Portfolio of Grants table for more information regarding specific requirements for each major grant program.
Requirements can vary depending on the specific grant program and the respective authorizing laws; however, in general, the provisions of 2 CFR Part 200 (Subparts A - F) (UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS) apply to all major grant programs managed by NCEM.
If a recipient or subrecipient of grant funds provided by/through NCEM is not a state entity and is subject to the requirements of the Local Government Commission (LGC), refer to N.C.G.S. 159-34 and 20 NCAC 03. This applies to counties, cities, towns and all other municipal governments, as well as certain designated “public authorities” including some public utilities, hospitals and other related entities.
If a recipient or subrecipient of grant funds provided by/through NCEM is not a state entity and is not subject to the requirements of the Local Government Commission (LGC), refer to N.C.G.S. 143C-6-23 (STATE GRANT FUNDS: ADMINISTRATION; OVERSIGHT AND REPORTING REQUIREMENTS), and 09 NCAC 03M (UNIFORM ADMINISTRATION OF STATE AWARDS OF FINANCIAL ASSISTANCE). This includes non-profits and all other non-state entities that are not subject to the requirements of the LGC.
For procurement with grant funds, state agencies are generally required to follow state of NC procurement policies and procedures, plus a few additional federal requirements when purchasing goods and services with federal grant funds. Local governments and non-profit organizations that receive grant funding through NCEM are generally required to follow the most restrictive of all federal, state of NC, and their own local procurement policies and procedures that allows for compliance with all applicable layers (federal, state & their own).
Reporting Requirements
North Carolina state law (N.C.G.S. 143C-6-23 and 09 NCAC 03M) requires every non-state entity that is not subject to the requirements of the Local Government Commission (LGC) that receives state or federal pass-through grant funds from state agencies to file annual reports on how those grant funds were used. These reports must be filed no later than three months after the end of the non-state entity’s fiscal year. Reporting levels are based on the level of state financial assistance from all funding sources. All of the necessary reporting forms and instructions for NCEM grants, as well as a detailed explanation of the reporting requirements, are available on this website.
This applies to non-profits and all other non-state entities that are not subject to the requirements of the LGC. Government entities including counties and local governments are not required to file these reports.
Audit Requirements
As specified in 09 NCAC 03M .0205, effective 7/1/24 and updated 10/1/24, North Carolina state law requires every non-state entity that is not subject to the requirements of the Local Government Commission (LGC) who “receives, holds, uses, or expends State financial assistance” in an amount equal to or greater than $1,000,000 within its fiscal year” to conduct an annual single (or program-specific) audit within 9 months of their fiscal year end. “State financial assistance” includes all state grant funding and federal pass through grant funding from state agencies to non-state entities. The $1,00,000 audit threshold is based on the combined level of state financial assistance from all funding sources. This applies to non-profits and all other non-state entities that are not subject to the requirements of the LGC.
If a non-state entity recipient or subrecipient of grant funds provided by/through NCEM is subject to the requirements of the LGC, refer to N.C.G.S. 159-34 and 20 NCAC 03 for applicable audit and reporting requirements. These requirements are detailed on the LGC website here. This applies to counties, cities, towns and all other municipal governments, as well as certain designated “public authorities” including some public utilities, hospitals and other related entities.
As specified in 2 CFR 200.501, there is also a federal law requirement for an annual single (or program-specific) audit, except in very limited circumstances, if any federal grant recipient or subrecipient expends $1,000,000 or more in federal funds (including federal grant funds passed through a state agency) within its fiscal year. The $1,000,000 audit threshold is based on the combined level of federal funding from all funding sources and specifically includes federal funding passed through state agencies. The federal audit requirements apply to all recipients/subrecipients of federal grant funds, incl. counties, cities, towns, non-profits and all other entities expending $1,000,000 or more in federal funds within their fiscal year.
All audits required under state and federal law must be conducted in accordance with Generally Accepted Government Auditing Standards (gao.gov/yellowbook). Copies of all audits should be sent to: DPS_GrantComplianceReports@ncdps.gov . Copies of any audits required if $1,000,000 or more in federal funds are expended in a year should also be submitted to the Federal Audit Clearinghouse. For additional information about federal audit requirements, see 2 CFR 200, Subpart F.
Note that the $1,000,000 federal audit threshold is for all fiscal years starting on 10/1/24 and beyond. This means that if the fiscal year for your organization started 7/1/24 and ends 6/30/25, your federal audit threshold is still $750,000 for FYE 6/30/25. The $1,000,000 federal audit threshold would start for your organization with FYE 6/30/26 (and all subsequent FY) in that case. For example, if your organization had $850K in federal grant expenditures in FYE 6/30/25, a single audit would be required for that FY; however, if your organization had $850K in federal grant expenditures in FYE 6/30/26, a single audit would not be required for that FY.
Reporting & Audit Requirements Summarized
Reporting and audit requirements depend on the type of grant recipient/subrecipient (governmental or non-governmental), how much money they expend or receive, and whether the money is federal or state. Refer to the Summary of Grant Reporting and Audit Requirements table for more information.
Recipients/subrecipients of grant funds through NCEM are required to comply with all applicable federal, state, local and tribal laws and regulations, as well as all terms & conditions of the grant award.
Failure to comply may result in the return of funds and any other remedy for noncompliance specified in 2 CFR 200.339 and/or termination of the award per 2 CFR 200.340. This can also include disallowing reimbursement for any costs submitted by recipients/subrecipients that are not in compliance, withholding further awards for the project or program, and initiating suspension or debarment proceedings per 2 CFR Part 180. Additional conditions may also be placed upon non-compliant recipients/subrecipients for current and future grant awards, including additional monitoring. The State of North Carolina also maintains a Suspension of Funding List (SOFL) through OSBM for non-compliant grant recipients/subrecipients.
Fraud, waste and abuse of any federal or state funds can result in criminal prosecution through the U.S. Department of Justice and/or State Attorney General. Any suspected fraud, waste or abuse of NCEM grant funds should be reported to NC Department of Public Safety (NCDPS) Internal Audit: 1-844-208-4018.
As specified in 09 NCAC 03M .0205, North Carolina state law requires every non-state entity that is not subject to the requirements of the Local Government Commission who “receives, holds, uses, or expends State financial assistance” in an amount equal to or greater than $1,000,000) within its fiscal year to conduct an annual single (or program-specific) audit within 9 months of their fiscal year end.
However, if a non-governmental organization receives $1,000,000 or more in grant funds in the current FY that reimburses them for expenditures in a previous FY, then there is no audit requirement in the current FY. Those expenditures would have already been subject to audit testing when they were incurred in the previous FY if they equaled or exceeded the $1,000,000 threshold.
If the non-governmental organization in this scenario otherwise had $1,000,000 or more in grant expenditures in the current FY, then they would be required to complete and submit an audit in the current FY testing those expenditures.
In summary, the audit requirement for a non-governmental organization is based on the amount of grant expenditures in a FY, not on the amount of grant funding received in that FY.
If it is a governmental or other organization subject to the Local Government Commission, refer to N.C.G.S. 159-34 and 20 NCAC 03 for applicable audit and reporting requirements. These requirements are detailed on the LGC website here, and they are generally based only on the actual expenditure of funds regardless when the funds are received by the organization.
Note that this $1,000,000 audit threshold is for all fiscal years starting on 10/1/24 and beyond. This means that if the fiscal year for your organization started 7/1/24 and ends 6/30/25, your audit threshold is still $750,000 for FYE 6/30/25. The $1,000,000 audit threshold would start for your organization with FYE 6/30/26 (and all subsequent FY) in that case. For example, if your non-profit organization had $850K grant expenditures in FYE 6/30/25, a single audit would be required for that FY; however, if your organization had $850K grant expenditures in FYE 6/30/26, a single audit would not be required for that FY.
Public Assistance
Applicant: State, Local, Tribal, Territorial governments, and certain types of private nonprofit organizations (PNPs) are eligible Applicants for Public Assistance.
Subrecipient: An Applicant that receives a subaward from a pass-through entity (recipient) to carry out part of a Federal program.
The Term Applicant and Subrecipient are often used interchangeably, but have different meanings:
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An eligible local government or PNP is an applicant until their Request for Public Assistance (RPA) is approved by FEMA.
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After an RPA is approved, an applicant becomes a subrecipient of FEMA funds.
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NCEM is the lead agency on behalf of the State of North Carolina – the state is the recipient of FEMA funds
Public Entities
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Private Non-Profits (PNP)
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Only certain PNPs are eligible Applicants. To be an eligible PNP Applicant, the PNP must show that it has:
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A ruling letter from the U.S. Internal Revenue Service that was in effect as of the declaration date and granted tax exemption under sections 501 (c), (d), or (e), of the Internal Revenue Code; or
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Documentation from the State substantiating it is a non-revenue producing, nonprofit entity organized or doing business under State law.
Through the PA Program, FEMA provides grant funding for:
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Emergency protective measures and debris removal (Emergency Work); and
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Permanent restoration of damaged facilities, including cost-effective hazard mitigation to protect the facilities from future damage (Permanent Work)
Emergency Work (Categories A & B)
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A (Debris Removal)
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B (Emergency Protective Measures)
Permanent Work (Categories C, D, E, F, G)
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C (Roads/bridges)
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D (Water control facilities)
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E (Buildings/equipment)
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F (Utilities)
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G (Parks, Recreational, and other facilities)
The Federal Emergency Management Agency (FEMA) is a last resort funding source. If funding is available from an entity other than FEMA, those funds should be sought to cover costs associated with the project. A cost reduction in the amount of funding available from another source is applied to the project to prevent a duplication of benefits.
The following are the Laws, Regulations, and Policies pertaining to insurance:
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Law:
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Stafford Act – Section 311 discusses the insurance requirements and section 312 discusses the duplication of benefits.
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Regulation:
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Policies:
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Public Assistance and Program Policy Guide (PAPPG) and FP 206-086-1 Public assistance Insurance Policy discusses the requirements in more detail
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The following are the required insurance documentation:
- Policies
- Property
- Automobile
- Inland Marine
- Boiler and Machinery
- Flood
- Supporting Documents
- Declaration Page
- Endorsements
- Schedule of Values
- Building/Structure/Content
- Automobile
- Equipment
- Settlement Information
- Adjuster Report and Estimate
- Statement of Loss
- Proof of Payment
- Settlement Letters
- Denial Letters
- Disbursement of Proceeds by Location
- Litigation/Dispute Documents
Applicants receiving funding for permanent work to replace, repair, reconstruct, or construct a facility must obtain and maintain insurance to protect the facility against future loss.
O&M requirements applies to insurable facilities and property only (buildings, contents, equipment, and vehicles). The requirements apply to insurable facilities and property with estimated costs of $5,000.00 or more. The requirements are based on eligible costs prior to any reductions.
Facilities must be insured with the types and extent of insurance reasonably available, adequate, and necessary to protect against future loss to the property. Failure to O&M a facility when required will make that specific facility ineligible for funding. The Applicant as a whole or an entire project is not affected, only the specific facility.
If a facility is located in a special flood area and does not have flood insurance, it will get a mandatory National Flood Insurance Program (NFIP) reduction if it’s a facility that NFIP would insure. If the facility is in a flood area, sustained damage, but did not have flood insurance, FEMA will apply reduction of $1,000,000; $500,000 for the contents and $500,000 for the structure. This will be a loss to the Applicant.
If the Applicant’s improved project relocates outside of a flood zone, the O&M would follow as long as the facility is something the NFIP would insure.
Applicant shall ensure damages they present to FEMA and their insurance carrier are the same.
If Applicant signs the release, that’s where the claim stops. The Applicant needs to ensure all damages are captured before signing.
Cost Reduction Codes
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5900 – Actual insurance proceeds from other perils
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5901 – Anticipated insurance proceeds from other perils
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5902 – Mandatory NFIP maximum proceeds available
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5903 – Prior disaster insurance purchase requirement
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5904 – Actual non NFIP flood insurance proceeds
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5905 – Anticipated non NFIP flood insurance proceeds
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5906 – Ineligible amount failure to obtain and maintain insurance
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5908 – Actual NFIP insurance proceeds
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5909 – Anticipated NFIP insurance proceeds
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5911 – Actual insurance proceeds from wind
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5912 – Anticipated insurance proceeds from wind
FEMA provides numerous templates and forms for Public Assistance grants on their website, including the Request for Public Assistance - FEMA Form FF-104-FY-21-131 (RPA) and Project Worksheet FEMA Form FF-104-FY-21-133 (PW Worksheet) forms.
To help Public Assistance grant applicants/subrecipients document costs for reimbursement, FEMA provides the following templates for each of the various cost categories: Force Account Equipment Summary Record - FEMA Form FF-104-FY-21-141 (FA Equipment), Force Account Labor Summary - FEMA Form FF-104-FY-21-137 (FA Labor), Contract Work Summary Record - FEMA Form FF-104-FY-21-140 (Contracts), Rented Equipment Summary Record - FEMA Form FF-104-FY-21-139 (Rental Equipment), Materials Summary Record - FEMA Form FF-104-FY-21-138 (Materials).
Refer to the current version of the FEMA Public Assistance Program and Policy Guide (PAPPG) for guidance on the Public Assistance grant process and eligible costs. Chapter 6 of the current PAPPG discusses cost eligibility, specifically including labor, equipment, supplies/materials and contracts.
Hazard Mitigation Grants
Information on the Hazard Mitigation Grant Program (HMGP), Flood Mitigation Assistance (FMA) grants, and Building Resilient Infrastructure & Communities (BRIC) grants is available on the Hazard Mitigation page.