Maribeth Vander Weele
Monitoring vs. Auditing: Knowing the Difference Protects Your Program
What if the Federal government demanded your agency return $3 million in grant funding for findings of unallowable costs? What if your agency’s oversight of $900 million was determined to be ineffective, requiring your monitoring process to be overhauled?
Failing to monitor subrecipients, poor internal controls, insufficient documentation, and improperly conducted risk assessments are common findings of watchdog agencies, like the U.S. Department of Housing and Urban Development’s Office of the Inspector General. The Inspector General’s office cited all of these findings in audit reports like the ones referenced above—reports which are now part of the public record.
For pass-through agencies, requiring simple financial auditing isn’t enough. Even ensuring that Single Audits (formerly called A-133 audits) are conducted doesn't fulfill the legal requirement to monitor Federally funded programs, as laid out in 2 CFR Part 200 (also called the Uniform Guidance).
Subpart D of the Uniform Guidance states that non-Federal entities—for example, state agencies—that receive and distribute Federal grants (“subawards”) to subrecipients—such as municipal governments and nonprofit organizations—are responsible for monitoring the use of those funds. But what does that require, and how is it different from auditing?
To answer that question, we’ve compared three different types of oversight: monitoring, Single Audits, and financial audits.