This feature is part of an ongoing series from OHCS' Fiscal Compliance Monitoring staff. Each month, we'll post helpful new tips!
Managing federal and state grant funds comes with important responsibilities. As a grant recipient, you play a key role in safeguarding public resources and ensuring funds are used exactly as intended. Here’s what you need to know.
What’s Required?
Under 2 CFR 200.113, applicable HUD requirements, and your grant agreements, recipients and subrecipients must promptly disclose any credible evidence of:
- Fraud
- Waste
- Abuse
- Violations of federal criminal law
- Violations of the False Claims Act
Reports must be made to:
- The federal awarding agency
- The agency’s Office of Inspector General (OIG)
- Your passthrough entity
Understanding FWA
Fraud: Intentional deception for personal or financial gain.
Waste: Careless, excessive, or unnecessary spending of grant funds.
Abuse: Misuse of resources or actions that fall short of sound, prudent management.
Building Strong Prevention Practices
Effective prevention isn’t about one policy, it’s about a system of good practices, including:
Internal Controls
Implement segregation of duties, approval workflows, and documentation standards. Use recognized frameworks such as COSO or the GAO Standards for Internal Control.
Staff Training
Provide regular training on what FWA looks like, how to report concerns, and the importance of whistleblower protections. Include training at onboarding and annual refreshers.
Risk Monitoring
Review your program regularly to identify areas where funds may be vulnerable to misuse.
Monitoring & Oversight
Conduct desk reviews, site visits, and audits (including Single Audits when required). Ensure subrecipient monitoring aligns with grant agreements and Uniform Guidance §§ 200.331–332.
Reporting Mechanisms
Maintain confidential or anonymous reporting options to encourage timely reporting without fear of retaliation.
Investigation & Response
- Investigate every credible report promptly.
- Document findings and corrective actions clearly.
- Corrective actions may include training, restitution, policy updates, contract action, or legal referral.
Why It Matters
Failing to report credible evidence of wrongdoing can lead to serious consequences including:
- Withheld payments
- Disallowed costs
- Suspension or termination of the award
Strong stewardship protects your organization and the communities you serve.
Take Action Today
- Update policies to reflect state and federal requirements and mandate immediate reporting.
- Strengthen internal controls in high-risk areas such as procurement and payroll.
- Provide ongoing staff training to ensure employees recognize and report potential issues.
- Implement routine monitoring, including annual risk assessments and scheduled reviews.
- Maintain accessible hotlines or whistleblower protections.
- Take swift corrective action when issues arise, document steps clearly, and revise policies as needed.
By embedding these practices into your operations, you not only stay compliant, but strengthen organizational integrity and reinforce public trust.