Sequencing an Oversight Program
When Federal funds flow through to a state, county, or city, those agencies must monitor the use of funds received from a Federal grant to ensure compliance with applicable Federal requirements and that performance expectations are being achieved (2 CFR 200.328-329). Depending on the agency and type of grant, additional monitoring requirements may be added on top of those mandated by the Uniform Guidance. In either case, it’s the grant program managers who are frequently charged with figuring out what the oversight program will look like.
Because the Uniform Guidance does not enforce a particular approach to monitoring, agencies have significant flexibility when designing these programs. However, that flexibility can lead to overwhelm and difficulty getting started.
To help conceptualize what your monitoring program will look like, it’s helpful to understand the Grants Oversight Continuum.
Building Your Oversight Program
Phase 1: Build Awareness
An effective oversight program begins with facing the reality that no organization is immune from integrity challenges. These challenges range from skewed performance data to placing the needs of employees ahead of the communities being served in hiring, promotions, and contracting. In a worst-case scenario, they involve fraud. Therefore, the FIRST phase of building oversight begins with awareness—awareness of risks, red flags, types of common schemes, and the consequences for not ensuring proper oversight. It ALSO involves understanding the history and statistics about the prevalence of fraud.
Phase 2: Identify and Communicate Standards
Phase 2 begins with setting a tone at the top of the organization that communicates a commitment to operating in a high integrity environment. It also includes identifying standards to which the organization must adhere. Standards include federal and state laws and regulations, but they also include internal ethics policies and strong ethics provisions in contracts with vendors.
Once the standards have been set, they must be communicated to the broader organization. Staff—both program staff and those grantees to whom it’s relevant—should receive formal training and resources to guide implementation.
Phase 3: Prevent, Detect, and Investigate Compliance Breaches
Phase 3 involves ensuring that there are adequate systems to prevent, detect, and investigate fraud or other types of integrity breaches. Robust Internal Controls are a critical part of fraud prevention and are required of organizations that accept federal grants. Prevention includes screening of vendors, employees or—as in the case of charter schools—the organizations that operate the charters.
Next come systems for detecting integrity breaches. These include Complaint Hotlines and using Data Analytics to Detect Fraud. Audits are also required, but it’s important to keep in mind that standard financial audits are NOT designed to focus on fraud.
Finally, there should be a means to investigate breaches. As with all of the tools we’ve addressed, the scope depends on the size of the organization and its vulnerability to fraud or abuse. One means of investigation is to create or contract out an Office of the Inspector General. An outsourced inspector general is particularly helpful for organizations that are too small to support a full-time investigative office or that wish to benefit from the expertise and unbiased perspective an outside firm can bring.
Phase 4: Test the Standards
After your oversight systems have been in place for a while, compliance standards must be tested for efficacy. If federal funding is involved, this includes conducting legally required subrecipient monitoring. This is another area where Data Analytics can provide unique insights into areas of weakness and offer solutions for improvement.
Phase 5: Remediate, Recognize, Reward
Once a program or grantee’s areas of weakness have been identified, leadership should provide technical assistance, training, mentoring, and resources to correct non-compliance. For intentional misconduct, there should be a thoughtfully developed series of escalated repercussions. For some types of misconduct, such as theft, fraud, or child abuse, there should be zero tolerance.
Top performing programs and grantees should be recognized, and--as part of a risk-based approach--rewarded with less oversight. It’s important to identify what is working correctly and to celebrate successes.
Phase 6: Retool
The oversight process is iterative; each testing cycles offers room for improvement. After addressing changes at the grantee level, it’s important to apply what you’ve learned to your oversight practices as a whole. This phase includes updating and retooling processes, policies, contracts, training, resources, rewards, and consequences. Improvements should be communicated to internal and external stakeholders.
Once you understand the oversight process, it’s time to think specifically about your program and its needs. Our guide to Key Questions for Building a Monitoring Program can help.
At the Vander Weele Group, we’re here to help you master every part of the oversight process. Whether your program needs tweaking or you’re starting from scratch, we can help.
Need an Outsourced Inspector General? A monitoring program, or help with strategic planning? Want to know your responsibilities for oversight under ESSER, ARPA, and other key legislation? Have another question? Email us at email@example.com to speak with a grants oversight expert.