Monitoring is a critical component of federal award management for recipients of funds administered by agencies such as the Federal Emergency Management Agency (FEMA) and the U.S. Department of Housing and Urban Development (HUD). Monitoring is a Government Accountability Office (GAO) standard that provides information to assess accountability, transparency, and program effectiveness.
As federal funding programs continue to grow in complexity and scale, recipients and pass through entities are expected to maintain monitoring frameworks that go beyond basic compliance. Effective monitoring supports oversight of program performance, internal controls, and subrecipient activities, while helping organizations identify risks early, prevent fraud, waste, and abuse, and respond proactively to emerging issues.
Whereas an audit involves a systematic independent examination of an organization’s financial records, procedures, controls, and engagements, and is a one-time event, monitoring entails continuous observation, assessment, and tracking of various aspects of an organization’s operations, initiatives, or frameworks.
Monitoring Design
The Federal Uniform Guidance does not prescribe specific frequencies or methodologies for monitoring activities and instead emphasizes tailoring approaches to fit the specific needs of each state, local government agency, or subrecipient. Federal agencies often determine the appropriate frequency, scope, and methodology for monitoring reviews using pre-established checklists.
Federal funding recipients must design their organization and program monitoring strategies while adhering to all applicable federal, state, and local policies, regulations, and grant-specific requirements. A best practice for a federal funding recipient is to monitor not only their subgrantees and subrecipients, but also contractors and their own operations.
Monitoring Activities & Types of Events
Monitoring is a multifaceted process spanning multiple steps to ensure effective oversight and compliance, including:
Defining the monitoring objectives, scope, and methodology.
Gathering documentation, reviewing past reports, and assessing preliminary risks.
On-site visits to observe operations, interview staff, and gather firsthand information.
Documenting findings, summarizing observations, noting issues or non-compliance, and making recommendations for corrective actions.
Determining the appropriate monitoring approach requires a strategic risk assessment and a well-defined monitoring plan. Factors to consider include the overall capacity and availability of the subrecipient or grantee, their experience in managing federal funds, the scale of the grant award, the type of programs to be monitored, and the availability of agency resources.
Monitoring can be conducted either on-site or via a desk review. Desk reviews are performed remotely and are suitable for low- and medium-risk grantees, while on-site reviews are appropriate for higher-risk grantees and may be necessary depending on the type of program or project. Desk reviews offer cost savings but may be limited in scope compared to on-site monitoring, which provides closer access to personnel and records.
Crosscutting Requirements
Some grants face added complexity due to “crosscutting” requirements — overarching mandates that apply universally to all federal programs within a particular domain. For example, all Community Development Block Grant (CDBG) recipients must meet federal standards for environmental review, Fair Housing, and Civil Rights. Additionally, grantees may need to comply with the Davis-Bacon Act (DBA), Uniform Relocation Act (URA), and Lead Safe Housing Rule, depending on their projects.
Monitoring is not a one size fits all activity. Federal award recipients must design monitoring approaches that reflect their program objectives, risk profiles, funding complexity, and operational capacity, while remaining aligned with Uniform Guidance and applicable federal, state, and local requirements.
A well structured monitoring framework helps organizations demonstrate compliance, strengthen internal controls, and enhance program outcomes over time. By applying a risk based approach, maintaining clear documentation, and integrating monitoring into day to day operations, recipients can better position their organizations to meet oversight expectations and support long term program success.
BDO Government Services supports state and local governments across the nation through the full lifecycle of federal funding and monitoring. Drawing on deep government industry experience and the integrity of a CPA firm, we help clients navigate complex funding, accelerate deployment, and maintain compliance.