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17 <br />Consolidated enreement -FY II <br />J. PROVISION OF TERMINATION <br />Page 14 of 19 <br />Either party may terminate this agreement for reasons other than non- compliance upon sixty (60) days <br />written notice. If termination should occur, the Department shall receive payment only for allowable <br />expenditures. <br />The State may withhold payment to the Department until the State can determine whether the Department is <br />entitled to further payment or whether the State is entitled to a refund. <br />K. COMPLIANCE <br />1, The State shall respond to non - compliance with all terms of this agreement as follows: <br />a. Upon determination of non - compliance, the State shall give the Department sixty (60) days written <br />notice to come into compliance. If the deficiency is corrected, the Department shall submit a <br />written report to the State that sets forth the corrective action taken. <br />b. If the above deficiencies should not be corrected to the satisfaction of the State after the sixty (60) <br />day period, disbursement of funds for the particular activity may be temporarily suspended pending <br />negotiation of a plan of corrective action. <br />c. If the deficiency is still not corrected within the next thirty (30) days following temporary <br />suspension of funding, program funds may be permanently suspended until the Department can <br />provide evidence that the deficiencies have been corrected. <br />d. In the event of the Department's non - compliance with clauses of this agreement, the State may <br />cancel, terminate, or suspend this agreement in whole or in part and the Department may be <br />declared ineligible for further State contracts or agreements. Such terminations for non - compliance <br />shall not occur until (1) the provisions of Section K -1 (a -c) have been followed, documented, and <br />have failed to provide a resolution, and (2) all other reasonable administrative remedies have been <br />exhausted. <br />2. Subrecipient Monitoring — OMB Circular A -133 (Audits of States, Local Government, and Non - Profit <br />Organizations) as revised on June 27, 2003 requires that pass - through entities monitor the activities of <br />their subrecipients as necessary to ensure that federal awards are used for authorized purposes in <br />compliance with laws, regulations and the provision of contracts or grant agreements and that <br />performance goals are achieved. North Carolina establishes comparable monitoring requirements for <br />State funds received by subrecipients in N.C.G.S.143 -6.2, Use of State funds by non -State entities, for <br />non -State subrecipients, and N.C.G.S.158 -34, Annual independent audit. rules and regulations, for <br />local units of government. Also, DHHS -DPH must perform subrecipient monitoring as required in the <br />DHHS Policy and Procedure Manual entitled "Monitoring of Programs" dated August 1, 2002. <br />DHHS -DPH conducts monitoring in accordance with its Subrecipient Monitoring Plan dated January, <br />2006. Additionally, each Local Health Department is required under Circular A -133, N.C.G.S.143 -6.2 <br />and N.C.G.S.159 -34 to perform monitoring of its subrecipients and to maintain records to support such <br />monitoring activities and results. Accordingly, the Department shall participate fully in subrecipient <br />monitoring by DHHS -DPH and shall appropriately monitor its subrecipients to the extent necessary <br />based on the assessed level of risk. <br />