This Integrity Bulletin highlights the importance of effective subrecipient management and oversight by grantees receiving funds from the U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development (CPD). On December 26, 2013, the Office of Management and Budget issued revised guidance under 2 CFR (Code of Federal Regulations) Part 200. The result was consolidation of and changes to government-wide uniform administrative requirements, cost principles, and audit requirements for Federal awards. These changes emphasized a grantee’s responsibility to manage and monitor its subrecipients, including monitoring a subrecipient’s performance and compliance with applicable laws and regulations, as well as taking appropriate action when performance and compliance issues arise.
The American public wants accountability from government and assurance that Federal funds are spent effectively to accomplish their intended purpose. For CPD programs, grantee oversight of subrecipients is a critical place “where the rubber meets the road.” It is where results are attained and funds are safeguarded. Under 2 CFR Part 200, grantee monitoring of subrecipient activities is required to ensure that (1) subawards are used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and (2) subaward performance goals are achieved. When no monitoring or insufficient monitoring occurs, the grantee may risk losing HUD funding. Regulations at 2 CFR Part 200 require grantees to establish and maintain effective internal controls for themselves and ensure that their subrecipients do the same. One way a grantee can develop internal controls is by designing an effective monitoring process.
This Bulletin provides key tips for improving effective oversight of subrecipients—building monitoring into a work plan; assessing subrecipients; creating a monitoring strategy; documenting reviews and issuing a monitoring report; and following up with subrecipients. The Bulletin also provides examples of subrecipient management issues, along with ways in which these issues could have been better managed.