Department of Health and Human Services 
 
OFFICE OF  

INSPECTOR GENERAL  

P A
ROTOCOL FOR  SSESSING  

S  M
TATES ONITORING OF  

S
UBGRANTEES

            Inspector General 
December 2004 
OEI-05-03-00062  Office of Inspector General
 
http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs. This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout the department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management 
and program evaluations (called inspections) that focus on issues of concern to the 
department, the Congress, and the public. The findings and recommendations contained 
in the inspections reports generate rapid, accurate, and up-to-date information on the 
efficiency, vulnerability, and effectiveness of departmental programs.  The OEI also 
oversees state Medicaid fraud control units, which investigate and prosecute fraud and 
patient abuse in the Medicaid program. 
Office of Investigati ons
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers. The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. The OCIG imposes program exclusions and 
civil monetary penalties on health care providers and litigates those actions within the 
department. The OCIG also represents OIG in the global settlement of cases arising 
under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops compliance program guidances, renders advisory opinions on OIG sanctions to 
the health care community, and issues fraud alerts and other industry guidance.  
  A B S T R A C T
Many Federal programs are administered through Federal grants to 
States and other entities.  Increasingly, States are passing through 
these Federal funds to subgrantees to carry out core program services. 
According to Federal requirements, States must monitor their 
subgrantees.  However, these requirements are general, lacking the 
specificity needed to evaluate States monitoring practices. 
Federal stakeholders, including the Office of Management and Budget 
(OMB) and Congress, have expressed concern that States are not 
adequately monitoring their subgrantees, and that this may reflect a 
lack of Federal agency oversight.  Based on this concern, OMB created 
an interdepartmental Task Force on Subrecipient Monitoring in 2002.  
The Office of Inspector General has focused a number of its inspections 
and audits on subgrantee monitoring as part of a broader effort to 
review the management of grant programs under the Department of 
Health and Human Services. 
To assess States monitoring of subgrantees in a recent inspection, 
Oversight of States Subgrantee Monitoring in the Foster Care 
Program (OEI-05-03-00060), we developed measurable criteria based 
on Federal grants management requirements. We anticipate that our 
criteria will be useful to other oversight entities attempting to assess 
States subgrantee monitoring.  Toward that aim, this document 
outlines the content of our criteria, the process we undertook to develop 
these criteria, and the methodology we used to apply our criteria to 
States monitoring of subgrantees in the foster care program. 
  OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  i  
 T A  B L E   O F   C O N T E N T S  
ABSTRACT ....................................................... i
 
INTRODUCTION ................................................ 1
 
CRITERIA ....................................................... 4
 
Development of Criteria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4

  Criteria  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
  
Using Criteria to AssessStates Subgrantee Monitoring  . . . . . . . .  6
  
ACKNOWLEDGMENTS ......................................... 13 

END NOTES .................................................... 14

  OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  ii    I N T R O D U C  T  I O N
OBJECTIVE 
To present a set of measurable criteria based on Federal grants 
management requirements that can be used to assess States 
monitoring of subgrantees.  
BACKGROUND 
To assess States monitoring of subgrantees in a recent inspection, 
Oversight of States Subgrantee Monitoring in the Foster Care 
Program (OEI-05-03-00060), we developed measurable criteria based 
on Federal grants management requirements. We anticipate that our 
criteria will be useful to other oversight entities attempting to assess 
States subgrantee monitoring.  Toward that aim, this document 
outlines the content of our criteria, the process we undertook to develop 
these criteria, and the methodology we used to apply our criteria to 
States monitoring of subgrantees in the foster care program. 
Recent Federal Interest in Subgrantee Monitoring 
In 2001, the Secretary of the Department of Health and Human 
Services (HHS) created an initiative to improve the management of 
HHS grant programs. The Assistant Secretary for Administration and 
Management (ASAM) is taking a lead role in this effort.  The Office of 
Inspector General (OIG) has also undertaken a broad effort to study the 
control, effectiveness, and value of HHS grant programs. 
Federal stakeholders, including the Office of Management and Budget 
(OMB) and Congress, have expressed concern that States are not 
adequately monitoring their subgrantees, and that this may reflect a 
lack of Federal agency oversight.  Based on this concern, OMB created 
an interdepartmental Task Force on Subrecipient Monitoring in 2002.  
This task force is reviewing regulations and policies to identify whether 
Federal guidance and oversight of subgrantee monitoring is adequate.1 
Congress has also shown its concern by requesting reviews of 
subgrantee monitoring in specific HHS programs.2 
Recent Work by the Office of Inspector General 
The OIG has reviewed subgrantee monitoring in several HHS programs.  
The OIG recently examined monitoring of subgrantees in the Public 
Health Preparedness and Response to Bioterrorism program and in the 
Ryan White CARE Act program.3   In 2004, OIG examined States 
monitoring of subgrantees in the foster care program.  This inspection 
found that three of the six States reviewed lacked an adequate fiscal or 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  1  I N T R O D U C T I O N  
program monitoring mechanism, and that the Administration for 
Children and Families pays minimal attention to States systems for 
monitoring subgrantees.  To assess States monitoring, we developed the 
criteria that are presented in this technical report.  
Grants Management Requirements 
In HHS, responsibilities for State administration of Federal funds are 
delineated by two sets of Federal requirements: 
o 	  the Uniform Administrative Requirements (45 CFR Part 74 or 
45 CFR Part 92),4 and 
o 	  the Single Audit Act (implemented by OMB Circular A-133). 
Specifically, the Uniform Administrative Requirements contain HHS 
grants management regulations and incorporate OMB Circular A-133 
by reference.  Together, the regulations and circular set forth major 
HHS grants management requirements, including a subset of 
requirements that are specifically related to the administration of 
subawards. 
In accordance with these requirements, States have several different 
responsibilities that are part of managing Federal grants passed 
through to subgrantees. First, States must communicate basic grants 
information to subgrantees.5 
Second, States must monitor their subgrantees performance.  According 
to Federal grants management requirements6, States must: 
o 	  Ensure that subgrantees are complying with program 
requirements and achieving performance goals. 
o 	  Ensure subgrantees are complying with fiscal requirements, such 
as having appropriate fiscal controls in place, and are using 
awards for authorized purposes. 
States can ensure that subgrantees are meeting these requirements 
through a variety of monitoring mechanisms, including progress 
reports, site visits, financial reports, independent (third party) financial 
audits, and/or internal (State-conducted) financial audits.   
Finally, States must ensure that all subgrantees designated as 
subrecipients, according to OMB Circular A-133, that meet the audit 
threshold specified in the circular, receive a Single Audit.7  Single 
Audits include a traditional financial audit of subgrantees basic 
financial statements, as well as an auditors report on subgrantees 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES	  2  I N T R O D U C T I O N  
internal controls, and an opinion on subgrantees compliance with 
requirements of major Federal programs.   
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  3    C R I T E R I A
CRITERIA DEVELOPMENT 
Grants management requirements for States monitoring of subgrantees 
are general. States are required to monitor the activities of 
subrecipients as necessary to ensure that Federal awards are used for 
authorized purposes in compliance with laws, regulations, and the 
provisions of contracts or grant agreements and that performance goals 
are achieved.8  HHS has issued no further guidance or delineation on 
what kind or level of monitoring is considered necessary.  Thus, to 
assess whether States are monitoring their subgrantees as necessary, 
it is essential to define measurable criteria. 
To develop criteria based on the general grants management 
requirements, we consulted various grants management sources. 
Specifically, we reviewed:  
o 	 Federal requirements, including 45 CFR Part 74,  
45 CFR Part 92, and OMB Circular A-133; 
o  	 OMB Circular A-133 compliance supplements; 
o  	 applicable HHS grants management guidance; 
o 	 subgrantee monitoring guidance produced for other HHS programs; 
o 	 guidance for other Federal departments; 
o 	 industry guidance from Management Concepts and Thompson 
Publishing Group; 
o 	 grants management reports from the Government Accountability 
Office (GAO), OIG, ASAM, and Assistant Secretary for Planning and 
Evaluation; and 
o  	 Single Audit reports containing subrecipient monitoring findings for 
States foster care programs. 
We presented our criteria to staff from ASAM in its draft form.9 The 
ASAM staff found our criteria to be reasonable and consistent with 
Federal requirements. 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  4  C R I T E R I A  
  
CRITERIA 
We developed these criteria as a set of minimum standards based on 
Federal grants management requirements.  Our goal was to develop 
criteria specific enough to be measurable, yet general enough to allow 
for variation in how States execute their monitoring of subgrantees. 
Our criteria set forth the following framework for assessing whether or 
not States were monitoring as necessary:  States must have at least 
one fiscal monitoring mechanism and one program monitoring 
mechanism in place.  In addition to assessing States program and fiscal 
monitoring systems, we also examined their adherence to requirements 
related to communicating required grants management information.  
FEDERAL REQUIREMENTS  CRITERIA 
Program and Fiscal Monitoring 
States must: 
--monitor the activities of subrecipients as 
necessary to ensure that Federal awards are 
used for authorized purposes in compliance with 
laws, regulations, and the provisions of contracts 
or grant agreements and that performance goals 
States must have at least: 
are achieved.  [OMB Circular A-133, 
__.400(d)(3)] 
--one fiscal monitoring mechanism, and 
--manage and monitor each project, program, 
--one program monitoring mechanism 
subaward, function or activity supported by the 
award. [45 CFR  74.51(a)] 
--monitor grant and subgrant supported activities 
to assure compliance with applicable Federal 
requirements and that performance goals are 
being achieved. [45 CFR  92.40(a)] 
Communication of Required Information 
States must provide subgrantees with the best 
States must at least inform subgrantees that the 
information available to describe the Federal 
grant includes Federal funds. 
award.  [OMB Circular A-133, __.400(d)(1)] 
States must advise subgrantees of requirements 
States must inform subgrantees of Federal 
imposed on them by Federal laws and 
grants management requirements. 
regulations.  [OMB Circular A-133, __.400(d)(2)] 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  5  C R I T E R I A  
  
USING CRITERIA TO ASSESS STATES MONITORING OF 
SUBGRANTEES:  DATA COLLECTION AND ANALYSIS  
This section demonstrates how we applied our criteria to assess States 
monitoring of subgrantees in the foster care program.  First, we present 
our methodology for collecting data from States, including three key 
data collection instruments from our inspection.  Each instrument is 
presented in a half-page format and is followed by brief definitions and 
instructions for use.  Then, we turn to our analysis, which consisted of 
comparing the data we collected with our criteria. 
Data Collection 
We examined States subgrantee monitoring through interviews with 
staff and a review of States subgrantee files. 
Interviews with monitoring staff.  To understand the complexities of State 
monitoring systems, we began by interviewing staff members 
responsible for monitoring subgrantees.  Typically, this included 
interviews with fiscal, program, and licensing staff.  We also reviewed 
policies, protocols, and guidance related to subgrantee monitoring.   
We used structured interviews aimed at gaining a full understanding of 
the complex design of States systems for monitoring subgrantees.  We 
asked staff to describe each of their monitoring mechanisms, including 
how frequently mechanisms were used to collect information, how the 
information was reviewed, and how the State followed up on problems 
that were identified during this process. 
The following Monitoring System Summary table summarizes the 
design of a States monitoring system, based on information gathered in 
interviews and by reviewing monitoring protocols.  After completing the 
Monitoring System Summary, we used it as a guide when conducting 
subgrantee file reviews. The summary provides information about 
which monitoring mechanisms each subgrantee should have received 
and indicates what documentation to expect in the file.  The summary is 
also useful at the analysis stage, when assessing whether the design of 
a States monitoring system meets our criteria. 
O EI-05 - 03 -00062  CRI TER I A FOR ASSE SSING   STAT E S MONITO  RING   OF SUBG   RANT EES  6  C R I T E R I A  
  
Monitoring System Summary 
State:  
Monitoring Mechanism  Frequency  Review  Follow-up 
FISCAL MONITORING 
PROGRAM MONITORING 
Monitoring Mechanism: 
List the name of the monitoring mechanism. This could include progress reports, site 
visits, financial reports, independent audits, State-performed audits, or other such 
approaches. Single Audits should be included under fiscal monitoring.  If the 
mechanism does not apply to all subgrantees, indicate the subset for which the 
mechanism applies.  Example: Monthly Progress Reports for group homes. 
Frequency:  The number of times the mechanism should be used in your sample timeframe (we 
used 1 year).  Example:  for Monthly Progress Reports, Frequency = 12. 
Review:  Enter Y if State staff indicate that they review submitted information, or enter N if they 
indicate that they do not review.  For monitoring that the State conducts directly, such 
as site visits, review should be coded N/A. Check the shaded box within the column if 
staff indicate that their review is documented.    
Follow up:  Enter Y if State staff indicate that they follow up with subgrantees, or enter N if they 
indicate that they do not follow up.  Check the shaded box within the column if staff 
indicate that their follow up is documented. 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  7  C R I T E R I A  
Review of States subgrantee monitoring files:  After gaining an 
understanding of how States intended to monitor their subgrantees, 
we used structured data collection instruments in our review of 
subgrantee files.  To verify whether States monitoring systems were 
functioning as the State described, we reviewed documentation of 
monitoring in a sample of subgrantee case files.  For example, if a 
State requires monthly fiscal reports, we reviewed each file for 
evidence of 12 fiscal reports.  Next, we reviewed the file for evidence 
that the 12 reports had the type of review and follow up described by 
the State. 
We also assessed whether States met Single Audit requirements in 
those States that required their subgrantees to have a Single Audit.  
Namely, we assessed whether States followed up on all subrecipient 
audit findings within the 6-month time period. 
In cases where States were unable to provide us with documentation of 
their monitoring activities onsite, we allowed them additional time to 
locate and send us the documentation.  In cases where documents were 
unavailable, States were not given credit for carrying out monitoring for 
these particular subgrantees. 
We used the following Subgrantee Monitoring File Review worksheet to 
record information from an individual subgrantee file.  First, the 
analyst enters the monitoring mechanisms and documentation 
expected, using information in the Monitoring System Summary table 
and from interviews. Then the analyst reviews the subgrantee 
monitoring file and records what documentation is actually found in the 
file. After completing a file review for each selected subgrantee, these 
worksheets can be aggregated and used when analyzing whether States 
monitoring mechanisms are functioning as States described. 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  8  C R I T E R I A  
  
Subgrantee Monitoring File Review 
Subgrantee ID#  _____________________          State ________________ 
Monitoring Mechanism  Frequency  Review  Follow up 
Expect  Actual  Expect  Actual  Expect  Actual 
FISCAL MONITORING 
PROGRAM MONITORING 
Monitoring Mechanism: 	 List the name of the monitoring mechanism.  Example:  Monthly 
Progress Reports. 
Frequency (expect): 	 The number of times the mechanism should be used annually. 
Example:  for Monthly Progress Reports, Frequency (expect) = 12. 
Frequency (actual): 	 The number of times the mechanism was actually used for the sample 
year according to documentation in the monitoring file.  Example: for 
a file that reflects 10 Monthly Progress Reports for the year, Frequency 
(actual) = 10. 
Review (expect): 	 The number of times evidence of review is expected annually.  If State 
staff indicate that they do not document their review, this number 
should be zero.   
Review (actual): 	 The number of times review was documented (e.g., check marks or 
other notations indicating review) for the sample year. 
Follow up (expect): 	 The number of times evidence of follow up is expected annually, or 
U for unknown (e.g., if the State only follows up in cases where a 
problem is identified). 
Follow up (actual): 	 The number of times evidence of follow up was found.  Example:  for 
a file that includes documented follow up for 8 of 12 Monthly Progress 
Reports, Follow up (actual) = 8, even if the file contains evidence of 
multiple follow up actions for individual reports. 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  9  C R I T E R I A  
Review of States subgrantee contracts and other communication: To assess 
whether States had communicated required grants management 
information to subgrantees, we reviewed State contracts, and other 
forms of up-front communication to subgrantees.  Specifically, we 
reviewed documents for language informing subgrantees that they were 
receiving Federal foster care funds and language informing subgrantees 
of Federal grants management requirements. 
The Contract, Policy Manual, Other Communication checklist is used to 
review contracts and other forms of up-front communication between 
the State and its subgrantees.  The analyst can use the checklist to 
record which requirements the State has communicated to its 
subgrantees.  After completing a checklist for each selected subgrantee, 
these checklists can be aggregated and used when analyzing whether 
States communicated information as required. 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  10  C R I T E R I A  
  
Contract, Policy Manual, Other Communication Checklist 
Subgrantee ID#  _____________________        	  State ________________ 
I. Identify Federal awards UPFRONT by informing each subgrantee of the best information 
available to describe the Federal award. [OMB Circular A-133, __.400(d)(1)] 
1. Identify that the subgrantees award includes Federal funds, at least implying that funds are 
Title IV-E foster care funds. 

    ____ Yes  ____ No  
 
II. Advise subgrantees of requirements imposed on them by Federal laws or regulations.  
[OMB Circular A-133, __.400(d)(2)] 
1. 	45 CFR Part 74 or OMB Circular A-110, grants management requirements are: 
____ Explained  ____ Cited  ____ Implied  ____ Not included 
2. 	OMB Circular A-133 Single Audit requirement (if applicable) are: 
____ Explained  ____ Cited  ____ Implied  ____ Not included 
3. 	Subgrantees are required to pass through these requirements to any subcontractors. 
    ____ Yes  ____ No 
4. Subgrantees are required to permit appropriate officials of the Federal agency and pass-
 
through entity to have access to records and financial statements.  
 
[OMB Circular A-133, __.400(d)(7) and __.200(d)]

    ____ Yes  ____ No 
I. Identify Federal Awards: 
Check Yes if funds are identified to subgrantee as Federal.  
II. Advise subgrantees of: 
 
45 CFR Part 74 and OMB Circular A-133 requirements: 
 
Check: 	Explained if Federal requirements are delineated in any way, (e.g., in a Single Audit manual). 
Cited if Federal requirements are cited but not explained, (e.g., 45 CFR Part 74). 
Implied if Federal requirements are implied, but not cited or explained, (e.g., Subgrantee is 
responsible for all applicable State and Federal requirements).  This is the minimum States had 
to communicate to meet our criteria. 
Pass through requirements: 
Check Yes if the subgrantee is specifically informed that it must pass through requirements to any 
subcontractors that the subgrantee hires. 
Access to records and financial statements: 
Check Yes if subgrantee is specifically informed that it must allow oversight entities this access. 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  11  C  	R I T E R I A  
Analysis of States Monitoring of Subgrantees   
In analyzing the data we collected from States, we found it 
straightforward to assess States communication of required information 
to subgrantees using our criteria.  However, to assess States program 
and fiscal monitoring mechanisms, we needed to further define our 
criteria. 
We broke down fiscal and program monitoring into three basic 
components:  collecting information, reviewing the information 
collected, and following up on identified problems.  We defined follow up 
to include communication back to the subgrantee regarding the results 
of the States monitoring.  Here are two acceptable examples:  (1) the 
State sends a letter of approval or corrective action to each subgrantee 
after the annual site visit; (2) the State follows up by letter or phone call 
only when a subgrantees progress report indicates a problem. 
In States where subgrantees are required to have a Single Audit, we 
defined follow up to include the specific Single Audit requirement that 
States follow up on all audit findings within 6 months.   
We operationalized our criteria to include standards for mechanisms 
design and functioning. Specifically, program and fiscal monitoring 
mechanisms must meet the following standards: 
o 	  Mechanism design is appropriate:  The mechanism must be 
designed to include all three basic components:  collecting 
information, reviewing the information collected, and following up 
on identified problems.  Further, the mechanism must be designed 
to monitor all subgrantees. 
o 	  Mechanism is functioning:  The mechanism must be functioning 
for all three basic components: collecting information, reviewing 
the information collected, and following up on identified problems. 
Use of the mechanism must be documented for 75 percent of the 
subgrantee monitoring files reviewed.  While we would expect the 
monitoring to be documented in all files, we wanted to allow for a 
small amount of error in States documentation of their 
monitoring. 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES	  12  
  A C K N O W L E D G M E N T S
This report was prepared under the direction of William C. Moran, 
Regional Inspector General for Evaluation and Inspections in the 
Chicago regional office.  Other principal Office of Evaluation and 
Inspections staff who contributed include: 
Susan Otter, Te am Le ader 
Ann Maxwell, Team Leader 
Mara Siler-Price, Lead Analyst 
Sara Zuiderveen, Intern 
Linda Hall, Program Specialist 
Elise Stein, Director, Public Health and Human Services Branch 
Technical Assistance  
Barbara Tedesco, Mathematical Statistician 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  13  
  E N D   N O T E S
1	  Task Force members include staff from:  the Office of Management and 
Budget (OMB); the Departments of Health and Human Services (HHS), 
Transportation, Agriculture, Education, Justice, Labor, and Navy; the 
Federal Emergency Management Agency; the National Science 
Foundation; and the States of Louisiana and Texas.   
2 A 2002 Government Accountability Office (GAO) study, Welfare 
Reform: Federal Oversight of State and Local Contracting can be 
Strengthened, GAO-02-661, 2002, examined State and local agency 
monitoring of subgrantees receiving Temporary Assistance for Needy 
Families funds, and found that ACF staff were not aware of monitoring 
problems identified in States Single Audit reports.  These audit reports 
cited weaknesses in States monitoring, including inadequate fiscal and 
program monitoring of local contracting entities. 
Congress has also expressed concern that the Health Resources and 
Services Administration (HRSA) does not adequately monitor grantees 
oversight of their subgrantees.  Consequently, in 2001, the Senate 
Finance Committee requested that the Office of Inspector General 
(OIG) review HRSAs oversight of Ryan White CARE Act Title I and 
Title II grantees and grantees oversight of their subgrantees. 
3	  The OIG issued 15 audit reports in 2003 on State and city monitoring of 
subgrantees receiving Public Health Preparedness and Response to 
Bioterrorism funds, citing that some States and major cities lacked 
appropriate monitoring mechanisms.  In addition, OIG responded to a 
request by the Senate Finance Committee (see previous endnote), and 
examined HRSAs oversight of Ryan White CARE Act Title I and Title 
II grantees and grantees oversight of their subgrantees. 
4	  There are two sets of HHS regulations that provide Uniform 
Administrative Requirements:  45 CFR Part 74, which typically applies 
to awards to non-governmental entities and is based on OMB Circular 
A-110, and 45 CFR Part 92, which typically applies to awards to 
governmental entities and is based on OMB Circular A-102.   
5	  OMB Circular A-133, __.400(d)(1) and __.400(d)(2). 
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES  14  6	  OMB Circular A-133, __.400(d) states that . . . a pass-through entity 
shall perform the following for the Federal awards it makes:     
. . . (3) Monitor the activities of subrecipients as necessary to ensure 
that Federal awards are used for authorized purposes in compliance 
with laws, regulations, and the provisions of contracts or grant 
agreements and that performance goals are achieved. 
7	  Under OMB Circular A-133, certain subgrantees must have a specific 
type of independent audit, called a Single Audit.  Subgrantees exempt 
from the Single Audit include all for-profit subgrantees, and those non 
profit subgrantees receiving less than $500,000 in total Federal awards.  
Subgrantees considered to be vendors are also not subject to the 
Single Audit.  States use Federal guidelines delineated in OMB 
Circular A-133, __.210 to determine whether subgrantees are 
subrecipients and thus subject to Single Audit requirements, or 
vendors and not subject to a Single Audit.  These guidelines 
characterize subrecipients as subgrantees who carry out the program:  
they may determine eligibility, make programmatic decisions, have 
their performance judged against the program objectives, and they 
must comply with program requirements.  Vendors are characterized 
as subgrantees who provide goods and services that are ancillary to the 
operation of the program:  they provide goods and services within 
normal business hours to many different purchasers, operate in a 
competitive environment, and are not subject to program requirements. 
The guidelines direct States to use their judgment in making this 
determination.  We found that some States considered foster care 
subgrantees to be subrecipients, and other States considered 
subgrantees providing the same core services to be vendors.    
8	  OMB Circular A-133, __.400(d)(3). 
9	  Staff from the Office of the Assistant Secretary for Administration and 
Management were presented with and approved our draft criteria.  We 
did not present them with the methodology we used to operationalize 
the criteria.   
OEI-05-03-00062  CRITERIA FOR ASSESSING STATES MONITORING OF SUBGRANTEES	  15