0900 Internal Control

State employees are encouraged to report verbally or in writing to their supervisor, department head, or the State Controller evidence of activity of a State agency or State employee constituting a violation of Chapter 143D The State Governmental Accountability and Internal Control Act. Article 14 of Chapter 126 of the North Carolina General Statutes provides protection to State employees reporting such activities. The Office of State Controller will forward suspected violations to the affected State agency for investigation. The State agency will investigate the reported violations in a manner consistent with provisions of the State Personnel Manual and will consult with the State Controller on the determination of whether a willful or continued failure by a State employee occurred. Additionally, North Carolina General Statute §114-15.1 requires department heads to report all possible violations of criminal statutes involving misuse of State property to State Bureau of Investigation no later than 10 days after receiving notice of such information or evidence.

Destroy paper and electronic documentation in office after 3 fiscal years from the end of the fiscal year for which the documentation was prepared if no litigation, claim, audit, or other official action involving the records has been initiated. If official action has been initiated, destroy in office after completion of action and resolution of issues involved.

Agencies must maintain current documentation of business processes and procedures and other elements of internal control. In addition, documentation of annual internal control evaluations will be maintained by agencies and in a manner consistent with requirements and guidance issued by the State Controller. Documentation should meet agency needs, such as consistency in desired practices, and also be commensurate with circumstances, such as size and complexity. The extent of documentation is a matter of judgment and should be done with cost-effectiveness in mind. Agency management will follow guidance and use tools and templates issued by the State Controller to document its annual evaluation of internal control.

The State agency Principal Executive Officer and Principal Fiscal Officer will submit accurate and complete financial information to the State Controller in accordance with prescribed policies, guidelines and time schedules issued by the Office of the State Controller. The State agency Principal Executive Officer and Principal Fiscal Officer will also certify as prescribed by the State Controller to the accuracy and completeness of the information being submitted.

The State agency Principal Executive Officer and Principal Fiscal Officer will certify, in writing, upon completion of the annual assessment of internal control and as further prescribed by the State Controller, that the signing officers are responsible for establishing and maintaining internal controls.

Internal control evaluations will be conducted annually using guidance, forms, and other assessment tools issued by the State Controller for this purpose. Agency management will direct and lead internal control evaluations and ensure that adequate, knowledgeable resources are available to complete evaluations on a timely basis. Internal control officers, financial officers, internal auditors, process owners and others may participate in required evaluations. When necessary, agency management will seek assistance from the Office of the State Controller and will consult with the Office of the State Auditor.

State agencies must make satisfactory progress in resolving deficiencies in internal control determined by the Office of the State Auditor, an agency internal auditor, a federal audit agency, or other external auditor. The State Controller may periodically request that state agencies provide copies of audit reports issued, as well as reports on actions planned and taken to resolve any reported deficiencies. If determined by the State Controller that satisfactory progress in resolving any deficiencies has not been made within a reasonable period from the date the audit report was received by the State agency, the State Controller shall consult with the State Auditor and may recommend that disciplinary action, as authorized by North Carolina General Statute §143D-12, be pursued.

Agency management may not delegate its responsibility for establishing and maintaining a proper system of internal control. Agency management must establish and reinforce a strong control environment through practice and action which embodies the enclosed principles.

It is the responsibility of every state agency to address deficiencies or weaknesses identified through an audit on a timely basis.

The employing agency may consult with the State Controller in a manner consistent with the provisions of the State Personnel Manual on the significance of any violation(s) and for the determination of the appropriate disciplinary action.