Post Award Management/Audit

Objectives:

At the end of this chapter you will:

1. Understand the importance of post-award monitoring.
2. Be aware of what you need to do to ensure that Federal funds are being spent appropriately.
3. Understand the importance of reviewing progress reports.
4. Know why you must Document, Document, Document.

Post Award Management

During the post-award phase, the PO takes the lead in:

1. Ensuring the recipient is complying with the programmatic terms and conditions of the agreement.

2. Ensuring that the project is being carried out as originally outlined in the workplan/proposal and that adequate progress is being made toward achieving project goals and objectives.

3. Ensuring that Federal assistance funds are being expended properly.

This cannot take place without active post award monitoring!

EPA Order 5700.6A1 contains guidance and policy on post award monitoring.

Project Officer Responsibilities:

The PO is responsible for:

Baseline Monitoring

Baseline Monitoring is the minimum, basic monitoring that should take place on every award issued by the Program Office on an ongoing basis throughout the lifetime of the award. For the purposes of this Policy, Baseline Monitoring will include ensuring, to the best of the Program's ability, that programmatic award terms and conditions are satisfied including but not limited to, receipt and acceptance of progress reports, and Quality Assurance requirements. During this process, the Project Officer (or other designated, and qualified, personnel) will make contact with the Grant Specialist and the recipient, annually during the life of the agreement. At this time, the Project Officer should also review the financial status of the award by comparing funds available to project progress and/or time remaining on the project. If follow-up is needed, the Project Officer will do so. All baseline monitoring must be documented in the Official Project File.

Baseline monitoring could be triggered by the receipt of a progress report. Regardless of whether progress reports are received quarterly, semi-annually, or annually, the project officer must review the progress report to determine adequacy of work status, allowability of fund expenditures, and the recipient's compliance with programmatic terms and conditions. Several Programs have developed an optional form for project officers to use to document this baseline monitoring. A sample of the OAR form can be found at the end of this section. While use of this form is optional in OAR, documentation of the results of this review is mandatory for everyone. Progress reports are the primary mechanism available to the PO to determine if the recipient is fulfilling their obligations as outlined in the work plan.

Reviewing progress reports and other work products to assure that the recipient is complying with applicable regulations and the programmatic terms and conditions in the agreement. These products should be reviewed for timeliness and completeness. Progress reports can be requested in the programmatic terms and conditions no more frequently than quarterly no less than annually. Progress reports should be reviewed against the work plan commitments.

All progress reports must contain the following to be acceptable:

The progress report should contain information 1) on the rate of expenditure versus progress on the project, 2) actual accomplishments, 3) problems encountered during the performance period, which may interfere with meeting program/project objectives. 4) proposed remedy's, 5) information on equipment purchased during the reporting period, and 6) any other information requested through terms and conditions.
When reviewing the progress report, the PO should also check the Financial Data Warehouse (a sample is available at the end of this chapter) to review drawdowns and compare the funds spent with the progress of the project. The Financial Data Warehouse can be accessed through:

http://oasint.rtpnc.epa.gov/neis/grant_web.grant_inquiry
Many Programs have created optional forms to assist POs perform progress report reviews. These checklists are also designed to make documentation of the POs review of recipient progress easier. Regardless of whether you use the checklist or not, you must document your monitoring activities in your project file!
After reviewing the progress report, the PO must provide comments to the recipient. Even if everything looks satisfactory, feedback should be provided to the recipient about the adequacy of the progress report.

Communicating regularly with the recipient, the GMO and other program staff to keep everyone informed of the status of the assistance agreement. Communicating regularly with the recipient also keeps the PO updated on the progress of the grant/cooperative agreement.

Maintaining the official technical project file and documenting all records of communications. Assistance agreement files should be documented to ensure that the Agency documents the obligations and responsibilities of all parties before, during, and after the agreement so that a third party can easily follow the sequence of events regarding the project.

Advanced Monitoring

Advanced Monitoring is the process by which a recipient's compliance with applicable programmatic and financial statutes, regulations, conditions and policies is validated. This can take place through the use of on-site evaluations or off-site evaluations (desk reviews). Program Offices are responsible for conducting on-site or off-site evaluations on a minimum of 10% of their active grantees (as of the previous October 1). Only Advanced Monitoring Activities will count towards a Program Office's 10% requirement. Counting towards the 10% requirement for Program Offices will be done on an award/program basis provided separate reports are filed for each evaluation conducted. Reports should be completed within 60 calendar days of the completion of the evaluation. Activities should not be counted until a report is filed. All advanced monitoring activities completed by the Program Office must include a final report which utilizes the format in Attachment Two of the Order. All reports must be attached electronically in the Compliance Database.

The Director, GAD, may approve the use of a Program's standard national report format provided the format contains the information included in Attachment Two, and the Program provides a crosswalk between the Program's format and GAD's format. Requests to use an alternative format must be made in writing to the Director, GAD, no later than 60 days from the effective date of this Order.

As part of the 10% requirement, Program Offices must conduct on-site evaluations during the Plan year.

Attachment Three describes the process of planning and conducting a Desk Review. Attachment Nine is a suggested protocol to use in conducting a Desk Review or on-site evaluation. Program Offices may modify the protocol to meet their individual needs. When doing so, five core areas must be addressed; these areas are: 1) Ensuring equipment purchased under the award is properly managed and accounted for, 2) Compare the recipient's workplan/application to actual progress under the award. 3) Examine the award's finances to ensure funds are available to complete the project, 4) Ensure all programmatic terms and conditions are met, and 5) Ensure all programmatic statutory and regulatory requirements are met. All Advanced Monitoring Activities must be documented in the Official Project File. Copies of completed protocols or reports must be included in the Official File. Reports and correspondence, if generated, must also be included in the Official File.

Criteria for selecting recipients for review should be spelled out in the Plan and documented in the Official Project File for each review. Suggested criteria may include, but are not limited to: Referrals, Audit Findings, Agency Priority, Recipient Experience, Project(s) Cost, Risk, Recipient Location, Statutory or other Requirements, Earmarks, and Funding by Multiple Programs. Attachment Seven is a sample scorecard which may be adapted for local use or guidance. Use of this scorecard is optional.

Program Offices must ensure appropriate follow-up actions are taken in response to the results of advanced monitoring activities. Where desk reviews identify significant problems, Programs will be expected to take necessary corrective action (see 40 CFR § 30.60 and §31.43) or target the matter for an on-site review.

Modifications to the Award Document

The PO is often the first person the recipient will contact when they have a request for a change to their project. It is important to get the request in writing. A recipient's written request for a change must be accompanied by a narrative justification for the proposed revision, and must be submitted to the PO.

The PO must forward to the GMO requests for changes requiring formal amendments. The PO must also include their recommendation for approval.

Changes not requiring prior approval or formal amendment:

Minor changes that are consistent with the project objective and within the scope of the agreement. For example, a recipient may make minor changes to the methodology, approach, or other aspects of the project to meet objectives sooner or to expedite completion.

For universities and nonprofit recipients, a one-time, no-cost extension for up to 12 months can be made without prior approval unless:

the terms and conditions of the award prohibit the extension;

the extension requires additional Federal funds; or

the extension involves any change in the approved objectives or scope of the project.

The recipient must notify the award official in writing with supporting reasons and revised expiration date at least 10 days before the expiration date specified in the award. To merely use up unobligated balances is not a justification for an extension.

Minor adjustments to the project budget, provided they use the funds in accordance with the approved workplan/proposal, EPA regulations, and applicable cost principles. For universities and non profits, the EPA technical program office may restrict the transfer of funds among cost categories or programs, functions and activities for awards in which the Federal share of the project exceeds $100,000 and the cumulative amount of such transfers exceeds or is expected to exceed 10 percent of the total budget (for States, local governments, and Indian tribal governments, a formal amendment is necessary).

Changes which require only PO approval (no formal amendment):

For universities and nonprofits, the recipient may seek PO approval for:

A change in a key person specified in the application or award document;

The absence for more than three months or a 25 percent reduction in time devoted to the project, by the approved project director or principle investigator;

The transfer of amounts budgeted for indirect costs to absorb increases in direct costs, or vice versa;

The transfer of funds allotted for training allowances to other categories;

Unless described in the application and funded in the approved award, the subaward, transfer or contracting out of any work under an award.

Changes which require a formal amendment for universities and nonprofits (signed by the Award Official):

Any revision resulting in the increase or decrease in funds.

Revisions to the objectives or scope of the project. (PLEASE NOTE: The recipient cannot request revisions that substantially change the original project objectives selected under the competitive process.)

Inclusions of costs which require prior approval under the cost principles, e.g., equipment, contractor costs.

For State, local government, and Indian Tribal governments:

Extensions to the period of availability of funds.

Changes in key project personnel, if key personnel were identified in the agreement. For research projects, this means a change in the recipient's project manager or principal investigator.

Cumulative transfers among direct cost categories or, if applicable, among separately budgeted programs, projects, functions, or activities which exceed or are expected to exceed 10% of the current total approved budget, whenever EPA's share exceeds $100,000.

Transfer of funds allotted for training allowances, i.e., from direct payments to trainees to other expense categories.

Contracting out or otherwise obtaining services of a third party to perform activities central to the purpose of the award not already approved in the workplan/narrative.

Changes Requiring a Deviation:

Recipients are required to comply with all EPA requirements. In some cases, however, it may be necessary to deviate from (waive) a regulatory provision. For example, under 40 CFR 30.54 and 40 CFR 31.45, the recipient is required to develop a Quality Assurance Plan if the project involves any environmentally related measurements or data generation. However, if the Project Officer decides that Quality Assurance is not appropriate for the project, he/she can request a deviation from that requirement, provided there is adequate justification.

EPA does not have the authority to deviate from statutory or Executive Order requirements.

The Director of the Grants Administration Division is the person delegated by the Administrator to approve or disapprove deviations from regulatory provisions not required by statute or Executive Order. The recipient must send the request directly to the PO who forwards the request with a recommendation to GAD. For Headquarters the Grants Specialist will process and submit the request to the Director of GAD for signature. The request for a deviation must include:

The name of the applicant or recipient, the assistance identification number of the application or award, the date of the award, and the dollar value of the application or award and the amount in question.

The section(s) of the regulation from which a deviation is requested.

A complete description of the circumstances, a careful analysis of the situation, justification for the deviation, an explanation of what the deviation will do, and any pertinent background information, including a copy of the applicant's or recipient's request.

A statement as to whether the same or similar deviation has been previously requested for the same project, and if so, an explanation as to why the previous request was made and the outcome.

If in doubt as to whether a modification requires prior approval, amendment, etc., contact your Grants Specialist for assistance. Keep records of any modifications made to the grant in your official file! Document all memos and communications concerning the modification.

EPA Response to Recipient Performance

There are instances when a Project Officer may face problems involving the participant (recipient, contractor, sub-contractor, supplier, etc.) in the assistance process. The problem may be technical in nature or it may involve nonperformance, poor performance, or it might be a criminal matter that places the Agency's assistance programs at significant risk. Issues of this type should be elevated immediately. PO documentation will be critical in supporting Agency decisions to impose special terms and conditions or take other actions.

Noncompliance and High Risk Recipients:

To deal with noncompliance or high risk recipients, Award Officials may:

Impose special conditions on the award,
Issue stop work orders,
Withhold payment of funds,
Terminate or annul an award, or
Initiate an investigation to determine if further action is necessary.
If all administrative remedies are exhausted, the EPA Debarment Official may suspend and/or debar any person or organization from participation in all EPA assisted activities for a specified period of time.

Because the remedies for recipient noncompliance may have ramifications outside the Agency, it is important that any Agency action be coordinated among the various offices concerned. Principal participants in the decision to take an action are the program office, the GMO, and the Office of General Counsel. The Office of Inspector General is also a key participant in suspension or debarment actions or where a matter may involve an audit or potential criminal wrongdoing.

Research Misconduct:

EPA defines research misconduct as fabrication, falsification, or plagiarism in proposing, performing or reviewing research, or in reporting research results. Assistance recipients are expected to use their own procedures to address indications or allegations of research misconduct with the Federal agency becoming involved only if it is not satisfied with the assistance recipient's handling of the matter.

If the assistance recipient notifies the GMO of any indication or allegation of research misconduct, the GMO must then notify the EPA Project Officer, the Office of the Inspector General, and OARM's Suspension and Debarment Office.

Disputes

Whenever possible, disputes between EPA and recipients should be resolved at the lowest level possible. The Award Official may designate one or more Dispute Decision Officials. The Disputes Decision Official is responsible for arbitrating disagreements between EPA and recipients (they may also arbitrate disputes with applicants). The most frequent formal disputes are a result of recipient disagreements with audit findings.

The following EPA actions cannot be disputed:

Denials of deviation requests (40 CFR Parts 30 and 31);
Bid protest decisions (40 CFR Parts 30 and 31);
National Environmental Policy Act decisions (40 CFR Part 6);
Audit Resolution Board decisions (EPA Order 2750); and
Debarments/suspensions (40 CFR Part 32).

The disputer may request that the Assistant Administrator review the Dispute Decision Official's decision and render the Agency's final decision. These requests must be sent directly to the Assistant Administrator or SRO.

Your Programs

Sample Baseline Monitoring Checklist

It is some programs policy to conduct baseline monitoring linked to the receipt of all progress reports. This optional form has been designed to make documentation of these monitoring activities easier. When Project Officers receive their progress reports they complete this form and put both the report and the checklist in their project file.

Assistance #:___________________
Recipient Name: ______________________________________

Type of Progress Report (Please check appropriate box):

Q Annual Q Semi-annual Q Quarterly

Progress Report Date:________________________ In the progress report, did the recipient...
cover work status, work progress, preliminary data results and evaluations?	YES	NO
discuss funds expenditures?	YES	NO
if yes, are the expenditures consistent with the work performed to date?	YES	NO
address difficulties encountered?	YES	NO
if yes, were satisfactory remedies proposed?	YES	NO
discuss planned activities for the next reporting period?	YES	NO
	YES	NO
In your review of the progress report, did you...
find the recipient's work progress to date satisfactory?	YES	NO
utilize EPA's Financial Data Warehouse?	YES	NO
if yes, did you find any areas of concern?	YES	NO
find that the recipient is in compliance with programmatic terms and conditions?	YES	NO
was the recipient scheduled to procure equipment for this quarter? (If no, skip questions a-b)	YES	NO
a. Was equipment purchased for this reporting period?	YES	NO
b. If yes, did the recipient provide you with the make, model, and serial number?	YES	NO
Was the recipient scheduled to submit a Quality Assurance Plan?
a. If yes, did the recipient provide you with an acceptable plan?	YES	NO
Comments:

To Be Completed at the End of the Project
Did you receive the Final Technical Report?	YES	NO
Did you find the report acceptable?	YES	NO
Did you contact GAD to certify the receipt of the Final Technical Report?	YES	NO
Date of contact:__________________ (Form Updated 8/04)

Audits

The Inspector Generals Act authorizes the Inspector General (IG) to have access to all records, reports, audits, reviews, documents, papers, recommendations, or other materials available to the Agency. To meet its responsibilities, the IG must have the cooperation of Agency personnel.

Title 18, United States Code, Section 1516 states that whoever, with intent to deceive or defraud the United States, endeavors to influence, obstruct, or impede a Federal auditor shall be fined or imprisoned. Therefore, it is imperative that all personnel recognize their obligation to make full disclosure of information pertaining to instances of waste, fraud, or abuse.

Internal Audits:

Internal Audits are performance audits that examine the programs or operations of Federal Agencies. (However, as part of an internal audit, State agencies or assistance recipients may be evaluated to provide further information about the performance of a Federal agency). Internal audits are used to test the adequacy of an organization's regulatory compliance and financial reporting. Additionally, they are used to test the effectiveness of its resource management, operating procedures, program results, and financial operations. Internal audits may evaluate the entire organization or only one or two of an organization's programs or operations. Internal audits of EPA are conducted by the U.S. General Accounting Office (GAO) or EPA's Office of Inspector General.

External Audits:

External Audits are audits that examine a Federal agency's assistance recipients. These audits are conducted by the EPA OIG or its contractor, or, in the case of Single Audits, by the recipient. They may be performed before, during, or after the completion of a project. Examples of external audits include single audits, pre-award audits, interim and final cost audits and indirect costs audit.

Pre-award audits are reviews conducted to evaluate a prospective offeror's cost or pricing data.
Interim and final cost audits are reviews conducted to assess the allowability of costs claimed under the assistance agreement or contract and to ensure compliance with the applicable requirements and award conditions.
Indirect cost audits are reviews conducted to determine whether the prospective offeror's indirect cost rate properly allocates allowable costs.

Audits of recipients may be requested by the program office or the GMO when considered necessary. These requests should be made on EPA Form 5700-29 "Assistance Audit Request." The PO may submit the form directly to the appropriate Divisional Office of the Assistant Inspector General of Audits (DIGA), but to the extent possible, the POs should coordinate requests for audits with the GMO.

EPA is authorized to audit the financially assisted activities of any recipient organization. However, it is Federal policy to place maximum reliance on a recipient's own audits (i.e. Single Audits) if they are carried out in accordance with applicable Federal audit standards.

EPA'S Internal Audit Process

Steps in the Audit Process for Internal Audits:

STEP 1 - The Entrance Conference

At the entrance conference, the auditors explain the purpose and scope of the audit and receive comments from the organization being audited regarding potential audit areas. Logistical issues are addressed, such as access to records, working space requirements, and who will be interviewed.

All personnel with extensive knowledge of the area being audited should be at the entrance conference. The OIG will ask for program and GMO contacts for the audit, and will provide a list of key audit personnel.

Also, have the OIG state in writing the objectives of the audit.

STEP 2 - Advisement of Findings

During the audit, the auditors should provide the organization with feedback about preliminary findings and developing issues. If any of these findings are inaccurate, based on factual information, you should immediately discuss your concerns with the lead auditor and explain your interpretation of the situation. Conversely, if any of the preliminary findings are accurate, you should immediately begin to take corrective action. Further, significant or sensitive findings should be brought to the attention of the organization's senior management immediately.

STEP 3 - Exit Conference

The auditors discuss the audit findings with the organization to clarify any questions they may have about the audit. If possible, auditors and management should try to reach agreement on the audit results.

STEP 4 - The Draft Report

A draft report is usually issued shortly after the audit is completed. The report contains the auditor's findings and documentation to support these findings. Agency management is expected to provide a written response to the audit findings contained in the draft report within 30 days, either concurring with the findings or providing explanations for any disagreements with the findings. Any planned or implemented corrective actions should be documented in the response. By starting corrective actions immediately, you may be able to resolve the audit finding(s) before the final audit report is issued and avoid having to respond to the finding(s) in your response to the final audit report.

STEP 5 - Final Report

The final report contains the auditor's findings and recommendations. It should reflect the pertinent information obtained from the audit and from the discussions with Agency management throughout the audit process.

STEP 6 - Audit Resolution

Audit resolution occurs when a "final response" is issued. If the questioned costs are $100,000 or more, the Action Official must obtain the concurrence of the EPA OIG on proposed corrective action. If the questioned costs are less than $100,000, management does not have to get OIG concurrence before issuing the decision.

Under the Inspector Generals Act Amendments, EPA management must track audit follow-up actions until all corrective actions are complete. Further, EPA management must report to Congress semi-annually on the status of audit resolution and follow-up activities, as well as provide an explanation for audits not resolved within 180 days and final actions that have not been completed.

SURVIVING AN INTERNAL AUDIT

Documentation:

The PO must document in the official project file all decisions, communications, memos, etc. from the beginning of the agreement. The auditors will assume that the PO has approved all actions taken by the recipient unless there is some documentation in the file to show otherwise.

The following list of documents may be helpful in identifying project management records needed by the auditors:

Applications, agreements, amendments, contracts, and subcontracts;

Accounting records, including reimbursements of funds, travel, records of in-kind contributions, etc.

Copies of performance reports and any other reports or products developed under the agreement.

Courtesy:

Maintain good working relationships with the auditors;

Be responsive to requests for information. Make all documents available to the auditors;

Use the audit as an opportunity to identify and address weaknesses.

Preparation:

Determine what auditors will look for;

Cooperate and demonstrate steps already taken to resolve issues or agree to take corrective action;

Demonstrate knowledge of program;

Ask other POs who have been through an audit what to expect during an audit.

Communication:

Answer all questions;

Tell auditors what action(s) you have taken to improve problem areas;

Be truthful. Discuss all problems and issues; give auditors all data they request.

SUMMARY:

At the beginning of the chapter, we identified several objectives you would accomplish after reading the chapter. The objectives are listed below, each followed by a brief summary of the key points the chapter covered.

1. Understand the importance of post-award monitoring. During the post-award phase, the PO takes the lead in ensuring the recipient is complying with the programmatic terms and conditions of the agreement, ensuring that the project is being carried out as originally outlined in the workplan/proposal and that adequate progress is being made toward achieving project goals and objectives and ensuring that Federal assistance funds are being expended properly. This cannot take place without active post award monitoring.

2. Be aware of what you need to do to ensure that Federal funds are being spent appropriately. The progress report should contain information on the rate of expenditure versus progress on the project, actual accomplishments, and problems encountered during the performance period which may interfere with meeting program/project objectives. When reviewing the progress report, the PO should also check the Financial Data Warehouse (a sample is available at the end of this chapter) to review drawdowns and compare the funds spent with the progress of the project.

3. Understand the importance of reviewing progress reports. Many Programs have created optional forms to assist POs performing a review of a progress report. These checklists are also designed to make documentation of the POs review of recipient progress easier. Regardless of whether you use the checklist or not, you must document your monitoring activities in your project file! After reviewing the progress report, the PO must provide comments to the recipient. Even if everything looks satisfactory, feedback should be provided to the recipient about the adequacy of the progress report.

4. Document, Document, Document

QUESTIONS

1. How often do you have to perform baseline monitoring? What does it consist of?

2. Can a recipient extend their assistance agreement to use up the money? What would you do if you came across this in monitoring?

3. Where can you find the required post-award monitoring report format? Do you need to use this format?

4. Who can deviate from regulation? Statute?

5. Where would you send the deviation request?

6. Why might your grant get audited?

7. Why is documentation important?

8. Why would a PO use the Financial Data Warehouse? Study the below record and determine why might there be a decrease amount.

Financial Data Warehouse

Post Award Management/Audit

Local Navigation