A report from the central council of agency IGs stresses concerns with management of grants awarded by federal agencies, saying that “audits, evaluations and investigations have identified significant challenges with respect to overseeing the use of grant funds and ensuring appropriate stewardship of federal grants.”
“Grant reporting requirements pose a unique oversight challenge because, unlike with contracts, Federal grantees do not have to provide invoices or billing details to support how they spent grant funds (but most grantees must provide a proposed budget with their grant applications and must maintain supporting documentation). The absence of detailed financial reports reduces transparency over how federal grant funds are spent and whether grantees used the funds to fulfill the public benefits for which the funds were awarded,” it said.
“Further, many grant programs involve a decentralized structure, where Federal funds are issued through prime grantees, which are required to administer Federal awards to subgrantees and provide monitoring of those subgrantees,” said the Council of Inspectors General for Integrity and Efficiency. “Given this limited visibility and control over expenditure of grant funds at the prime and subgrantee levels, there is increased risk of fraud, waste and mismanagement, to include conflicts of interest, false claims, and inadequate financial management systems.”
The report noted that the council previously has identified grant management as a top management challenge for federal agencies and describes risks different stages of the grants process, including potentially fabricated or backdated documents in support of applications; anomalous spending patterns during the term of a grant; and falsified expenditures or claims of accomplishments for final payouts, it said.
The report cites examples of IG investigations and audits that it said resulted in restitution of more than $31 million and the questioning of more than $1.7 billion in grant costs.