The AGA Fraud Prevention ToolKit
Grants and Program Management
AGA's Fraud Prevention ToolKit

Grants and Program Management

Risk Red Flags Tools/Best Practices
General Guidance

According to the Office of Management and Budget, federal outlays for grants to state and local governments exceeded more than $600 billion a year in FY 2010, consuming over one fifth of the federal budget and increasing 350 percent since fiscal year 1990. Government programs are, to a large extent, carried out by grants—the Federal government to state and local governments, state to local governments, governments to private sector contractors, suppliers and vendors, etc. These programs involve vast sums of money. Some of that money finds its way into the pockets of those not intended to receive it. The link to the right provides a tool to evaluate the internal controls over your grant programs. The cells below contain information to help you spot and deter fraud in grant programs.

Fraud, Waste and Abuse
Inadequate grant monitoring processes.
Unrealistic performance targets.
Lack of risk assessment.
Missing communication channels.
No fraud reporting hotline.
Program is Not Serving the Right Clients/Beneficiaries
Complaints from clients intended to be served.
Recipients and Sub-Recipients Do Not Understand Requirements and Responsibilities
Audit findings that go unaddressed.
Establish process to check all bidders/vendors/contractors for state/local debarment or exclusion from federal awards, suspended licenses, complaints from prior customers, etc.
Sub-Recipients Ineffective in Program Implementation
New subrecipients.
Repeat audit findings.
Conduct training for new sub-recipients
Grant Purposes Not Being Met
No follow up on grant recipients/subrecipients.
Required reports not received.
Complaints from clients intended to be served.
Perform oversight of prime/sub/vendor contract requirements to ensure agency gets what it pays for. Use onsite visits, milestones achieved or reports filed to check performance/progress before next allotment of funds; inspect goods/services received; compare invoice and purchase order to prevent overpayment.
Perform spot reviews or audits on vendor time sheets in a random sample to ascertain if hours worked match payroll invoices, or do site inspections. Different types of inspection reports can be designed or are available on the Internet.
Problems that Could Lead to an Audit Finding Not Addressed Early Enough
Repeat audit findings.
Unallowable costs.
Non-compliance with Treasury/State Agreement (CMIA).
Excess +/- balances of federal cash.
Expenditure of federal funds outside the availability period.
Program income not identified and/or reported.
Matching, Level of Effort or Earmarking Requirements Not Being Met
Requirements are not budgeted in the program.
In-kind contributions not documented.
No monitoring reports in place.
Reporting Issues
Inaccurate reporting.
Federal reports filed late or not at all.
No management review of reports.
Related audit findings.
No monitoring of federal requirements for changes.
Non-compliance with State/Local-Wide Central Service Cost Allocation Plans and Indirect Cost Rate Proposals
Unwarranted profitability of internal service funds.
Non-Compliance with Federal Civil Rights and Drug Free Workplace Laws
Irrational employee behaviors.
Unexplained employee absences.
Non-Compliance with The Buy American Act
Evidence of foreign-produced materials.
Non-Compliance with Federal Student Financial Aid
High non-completion ratios.
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