HHS Introduces AERO: A Collaborative Push for Stronger Grant Compliance and Oversight
- Matthew Merkel
- May 27
- 4 min read
Updated: May 31
The launch of AERO—the Audit Enforcement and Risk Oversight initiative—was announced by the U.S. Department of Health and Human Services (HHS) on May 21, 2026. HHS has framed AERO as a department-wide commitment to working with states and grantees. The primary goal is to resolve issues early, strengthen internal controls, and protect taxpayer dollars through improved consistency, transparency, and documentation.
Gustav Chiarello, HHS Assistant Secretary for Financial Resources and Chief Financial Officer, emphasized this collaborative spirit, stating, "Grantees who want to work with us to fix these problems will have a partner."
However, to maintain this partnership, subrecipients and administrators must understand the new technological expectations HHS brings to the table, as well as the significant consequences for entities that refuse to engage in corrective action.
Here is an in-depth look at what AERO entails, the repercussions for non-compliance, and the proactive steps your organization can take to maintain a healthy standing.1
AERO’s Tech-Driven Approach to Grant Oversight
To improve visibility into unresolved audit findings, HHS has deployed next-generation AI analytical tools to conduct an ongoing analysis of Single Audit information across all 50 states. This technology is currently examining at least five years of audit history to identify systemic vulnerabilities and internal control issues that have persisted over time. 1
Under the Single Audit Act and the Uniform Guidance, any non-Federal entity—including states, local governments, nonprofits, and higher education institutions—that expends $1,000,000 or more in federal funds annually is required to undergo a Single Audit.2
The Vander Weele Group conducts an annual survey of single audits, “What the Watchdogs Say” and the AERO results mirror those annual findings. Inconsistent reporting across states, and findings that reflect inadequate internal controls are the common compliance shortfalls that the Vander Weele Group has observed.
Through AERO, HHS is focusing on helping agencies remedy deficiencies in these audits, specifically looking at areas like allowable costs, eligibility, and the timeliness of required reporting. For example, our “ What the Watchdogs Say” survey found that states were not even aware of the reporting requirement for sub awardees (receiving $30,000 or more in awards) under the Federal Funding Accountability and Transparency Act of 2006 (FFATA).
AERO is also consistent with the Administration’s theme that “Taxpayers demand more than audits that are an end in themselves.” In Memorandum M-25-30, Ensuring Accountability: How We Oversee, Audit, and Improve, the Office Of Management and Budget advised federal agencies that, “From now on, audits must be a means to much better decision-making by the stewards of taxpayer resources.”
What Administrators and Subrecipients Need to Know
To stay compliant and foster a positive relationship with HHS, administrators must be acutely aware of the following parameters:
Firm Submission Timelines: Audit Reporting Packages must be submitted to the Federal Audit Clearinghouse (FAC) no later than 30 days after receiving the auditor's report, or 9 months after the fiscal year end, whichever comes first. As part of that package, Auditees must include corrective action plans for the latest and past findings. HHS has noted that hundreds of grantees are currently delinquent, and AERO will actively track overdue submissions.2
Addressing Repeat Findings: AERO aims to set clearer expectations for timely corrective action. HHS expects agencies to act on long-standing repeat findings and unresolved internal control deficiencies rather than letting them sit for years.
The Repercussions of Non-Compliance
While HHS has stressed its desire to work collaboratively to resolve audit findings, it has also drawn a firm line for entities that fail to address weaknesses identified in audits or fail to submit required audits altogether. For those unwilling to implement proper internal controls, HHS will leverage the Uniform Guidance to seek remedies, which may include:
Temporarily withholding payments until corrective action is taken.1
Disallowing costs for noncompliant activities.1
Suspending or terminating the award entirely.1
Withholding future federal funds or continuation funding.1
Initiating suspension or debarment proceedings.1
Proactive Steps to Maintain Compliance
To avoid these disciplinary actions and demonstrate a commitment to program integrity, administrators should proactively align their operations with AERO's goals:
Conduct a Historical Audit Review: Since HHS is reviewing at least five years of audit history,1 internally review your past audits. Identify any unresolved compliance issues and initiate corrective action plans immediately.
Verify Timely Submissions: Review your reporting procedures to ensure your Single Audit reports are submitted within the 30-day/9-month window to avoid being flagged as delinquent.2
Modernize Your Oversight: HHS is using AI to track compliance. Lead Agencies should similarly integrate tech-driven tools to catch vulnerabilities internally before they become federal audit findings.
Systemize Internal Controls: Establish definitive safety checkpoints within your grant lifecycle to ensure accurate attestations, allowable cost tracking, and continuous compliance.
Partner with the Vander Weele Group
The trillion-dollar federal grant landscape is changing, and as HHS integrates AI and shifts its mandates, the need for precision in your oversight has never been greater. At the Vander Weele Group, we provide the specialized expertise needed to seamlessly navigate this new era of grant management. Our Meaningful Monitoring® provides turn-key compliance for your pre-audit review. Our Guardrails 360™ service systemizes your management operations, setting up critical safety checkpoints that prevent compliance issues before they occur. Agent Tipster™ is our AI-powered process providing actionable insights to evaluate subrecipient risk, focusing your oversight exactly where it is needed most.
Stay ahead of AERO's new technological standards and ensure your funding remains secure. Contact the Vander Weele Group today at 773-929-3030 to schedule a consultation, and be sure to subscribe to our Substack: The Grants Oversight Ledger for up-to-date news and insights.
1 HHS Cracks Down on Years of Unchecked Audit Findings, U.S. Department of Health and Human Services Press Release, May 21, 2026
2 HHS Single Audit Resolution Division, U.S. Department of Health and Human Services