Financial Performance Indicators and Responses to the LGC
The self-reported information from your unit's audit report is used to calculate Financial Performance Indicators. The Data Instruction Workbook (DIW) Performance Indicator tab displays these indicators to auditors and local governments. If any unit's Financial Performance Indicator results are shaded red, this indicates a Financial Performance Indictor of Concern (FPIC) and the unit must submit a "Response to the Auditor's Findings, Recommendations, and Fiscal Matters" within 60 days from the auditor's board presentation. The response must address all performance indicators shaded in red.
Note: The word “FALSE” in a general performance indicator cell indicates an error in how the Data Input tab was completed. Look at the Data Input tab and the specific accounts used to calculate that indicator. Make sure that the directions were followed for every account used to calculate that indicator.
FPICs are defined and the process described, in North Carolina Administrative Code. Please use the links below to access the full text of the rules.
20 NCAC 03 .0502: Audit Contract
20 NCAC 03 .0508: Response to Findings, Recommendations and Fiscal Matters
The following are key elements that are required in FPIC responses:
(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) 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.
LGC staff has developed sample responses that can be used by governing boards in developing their responses to the LGC. Please visit the “Sample Responses” section below.
During the auditor’s presentation of the audited financial statements, the auditor must explain to the governing board any significant deficiencies, material weaknesses, or other findings as well as values for Financial Performance Indicators. The auditor must also notify the governing board of their requirement to submit a response, if applicable. Details on the auditor’s responsibilities are available in North Carolina Administrative Code 20 NCAC 03 .0502.
The document below provides sample text that can be used by governing boards to submit a response to the LGC due to significant deficiencies, material weaknesses, or other findings in the audited financial statements, or if the auditor determined that Financial Performance Indicators of Concern were identified. A response must be submitted to the LGC within 60 days of the auditor's presentation. Earlier submission is encouraged. Details on this response requirement are available in North Carolina Administrative Code 20 NCAC 03 .0508.
After a written response is developed and signed by a majority of the members of the governing board as required, submit the response to the LGC via the "FPIC Response" option under “Audits” on the LGC File Transfer Portal. Responses should not be mailed or emailed.
For additional guidance on preparing a successful response to FPICs, one should review Memorandum 2023-04 – How to Respond to Financial Performance Indicators of Concern (FPICs).
Sample Responses for FPICs
After a written response is developed and signed by a majority of the governing board members as required, 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.