For nonprofit organizations and state, local, and tribal governments, federal funding has become indispensable to providing the services and assistance their communities need. The hundreds of billions of dollars awarded in the form of grants to these organizations and governmental entities are allocated to perform financial improvements in several areas, such as education, healthcare, public safety, infrastructure, community development, and others. These funds often come with strict accountability and transparency requirements.
Why so much attention on transparency and oversight? While these concepts are nothing new to nonprofit and governmental agencies, effective oversight and transparency can help prevent the loss of crucial funds to fraud and waste. They also can inform citizens and local businesses about available grant funds and how to access the help they need. For those entities in need, effective oversight and transparency are crucial to administering grant funds quickly and efficiently.
This article explores just a few ways organizations can provide transparency and oversight in their monitoring and planning activities to benefit their communities.
Tracking Federal Funds Efficiently
Methodical tracking of federal funds is vital when it comes to transparency and oversight strategies. When tracking such funds, organizations should consider the following strategies:
- Track requirements and tasks associated with grant awards from the beginning.
- Identify federal awards received, federal awards expended, and the federal programs for which they were received.
- Consider daily or weekly reviews of detailed reports by management, including expenditures incurred to date versus reimbursements to date.
- Create comprehensive reports on the financial data and accomplishments from the outcome of received federal funds for future and outside reference.
Pass-Through & Subrecipient Monitoring
When administering federal funds, much of the required transparency involves oversight of pass-through entities (PTE) and subrecipients. Requirements for such entities can be found in Uniform Guidance. Here are a few best practices for organizations to keep in mind when dealing with pass-through funds.
- The PTE should be actively communicating the relevant information required (Section 200.332(a)):
- Clearly identifying the award (this includes, but is not limited to, the unique entity number, the Federal Award Identification Number (FAIN), and the federal award project description)
- Identifying and following requirements imposed by the PTE so the award is used in compliance with statutes, regulations, terms, and conditions of the federal award
- Identifying and following additional requirements imposed to allow the PTE to meet the federal awarding agency requirements (identification, reporting, special conditions, etc.):
- Indirect cost rate (federally recognized, negotiated, or de minimis)
- Subrecipient permits PTE and auditors to access records and financial statements
- Subaward closeout terms and conditions
- PTE should monitor the subrecipient (§200.332(d)):
- Reviewing financial and programmatic reports required by the PTE – A best practice is to perform reviews on a more frequent basis, e.g., once a week given current economic conditions
- Following up on whether the subrecipient is taking timely and relevant action on all deficiencies detected through audits, on-site reviews, etc.
- Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE
- Upon the PTE’s assessment of risk on behalf of the subrecipient, they may want to pursue further monitoring tools to help ensure proper accountability and compliance (subrecipient training and technical assistance, performing on-site reviews of subrecipient operations, etc.)
Technology & Data Analytics
In its 2019 report on governmental oversight, the Bipartisan Policy Center’s Task Force on Executive Branch Oversight recommends the use of technology and data analytics in governmental oversight. According to this report, “combining technology and data—deriving the value from data, being able to use data for decision-making—has resulted in the ability to have a ‘canary in the coal mine’ viewpoint of programmatic risk, of operational risk, and of mission effectiveness, thus allowing oversight bodies to identify potential areas for failure much earlier.”
Data mining software and analytics tools can help organizations comb through data and monitor performance more efficiently, and an online portal can provide a central point for data collection and reporting. Here are some things to consider when using an online portal:
- Security – The website should be built to maintain data integrity and deter cyberattacks. The system should have internal control processes in place to safeguard sensitive data.
- Flexibility – Reporting will come from a variety of organizations and businesses, so the portal must be able to accommodate varying forms of data and changes to projects.
- Ease of use – The portal must be easy to use and understandable for everyone who is required to use it.
- Analytics – The site should allow for quick data analysis and reporting.
Oversight is about more than just compliance. It involves developing a framework designed to improve performance and accountability, reducing the risk of fraud, waste, and abuse of funds. Transparency gives nonprofits and governmental agencies credibility through accountability and keeps constituents informed. This article only scratches the surface of these two vital tasks to administering federal funding.
FORVIS’ public sector experience, top-tier data analytics tools, process knowledge, and an understanding of the risks and challenges of working with federal funds can help you craft a transparency and oversight plan to help meet your organization’s needs. For more information, reach out to a professional at FORVIS or use the Contact Us form below.
Please note that this information is current as of the date of publication.