Financial Performance Indicators and Responses to the LGC
Under 20 NCAC 20 03 .0508, if a unit is notified by its independent auditor that the unit’s audited financial statements included one or more significant deficiencies, material weaknesses, or other findings, or if Financial Performance Indicators of Concern were identified, the governing body must develop a “Response to the Auditor's Findings, Recommendations, and Fiscal Matters" signed by a majority of the members of the governing body and submitted to the LGC within 60 days of the auditor's presentation.
20 NCAC 20 03 .0508 specifically requires:
For Audit Findings:
(A) A written description of the procedure, process, or action plan developed by the government unit to address each finding, including all material weaknesses and significant deficiencies, and any other issues related to the internal controls or fiscal health of the government unit as disclosed in the management letter, the Single Audit or Yellow Book reports, or any other communications from the auditor regarding internal controls as required by current auditing standards set by the Accounting Standards Board or its successors.
(B) The description shall provide specific and detailed steps with measurable results that allow the governing body to conclude that the procedure, process, or action plan as implemented and followed by the staff of the government unit, will address the specific audit finding. The description may include such information as the date for implementation, position titles responsible for implementation, positions performing the procedures or processes, frequency of performance, and other matters necessary to evaluate the success of the procedure or process.
For Financial Performance Indicators of Concern:
(A) A written description of the procedure, process, or action plan developed by the government unit to address each Financial Performance Indicator of Concern.
(B) The description shall provide specific and detailed steps with measurable results that allow the governing body to conclude that it will address each specific Financial Performance Indicator of Concern. The description may include such information as the time period required for improvement, any governing body action required for implementation, the steps to increase revenue or reduce expenses, the frequency of performance evaluation, and other matters necessary to evaluate the success of the plan.
Note that unit letters will no longer be issued by LGC staff; responses to issues of concern will be required and initiated by the unit under this new process.
To assist units in the transition to this new process, LGC staff has developed sample responses that can be used by governing boards in developing their responses to the LGC. Please visit the page below to see a sample “Performance Indicators of Concern” tab from the Data Input Workbook, along with sample responses that units can use in the development of their responses to the LGC.
Performance Indicators and Sample Responses
Submitting Your Response
After a written response is developed and signed as required and described above, the response should be submitted to the LGC via the "FPIC Response" option under “Audits” on the LGC File Upload Portal; please do not email responses.