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that cost is allowable and eligible for payment and does not constitute a waiver of any violation <br />by the Contractor of the terms of this Agreement. The Contractor acknowledges that the State <br />Government will not make a final determination about the allowability and eligibility of any cost <br />until an audit of the Project has been completed. If the State Government determines that the <br />Contractor is not entitled to receive any portion of the State assistance the Contractor has <br />requested or provided, the Department will notify the Contractor in writing, stating its reasons. <br />The Contractor agrees that Project closeout will not alter the Contractor 's responsibility to <br />return any funds due the State Government as a result of later refunds, corrections, or other <br />transactions; nor will Project closeout alter the. State Government's right to disallow costs and <br />recover funds on the basis of a later audit or other review. Unless prohibited by Federal/State <br />law or regulation, the State Government may recover any State assistance funds made <br />available for the Project as necessary to satisfy any outstanding monetary claims tha# the State <br />Government may have against the Contractor. <br />d. State Claims. Excess Payments. Disallowed Costs, including Interest. <br />(1) Contractor's Responsibility to Pay. Upon notification to the Contractor <br />that specific amounts are owed to the State Government, whether for excess payments of State <br />assistance, disallowed costs, or funds recovered from third parties or elsewhere, the Contractor <br />agrees to remit to the Department promptly the amounts owed, including applicable interest and <br />any penalties and administrative charges. <br />(2) Amount of Interest. The Contractor agrees to remit to the Department <br />interest owed as determined in accordance with N.C.G.S. 147-86.23. <br />e. De-obligation of Funds. The Contractor agrees that the Department may de- <br />obligate unexpended State funds before Project closeout. <br />Section 5. Accounting Records. <br />a. Establishment and Maintenance of Accounting Records. The Contractor <br />shall establish and maintain separate accounts for the public transportation program, either <br />Project 07-US-056 Page 14 of 49 <br />Orange County <br />