post-award phase
(CT:FIN-505; 05-13-2025)
(Office of Origin: CGFS/FPRA/FAFM)
4 FAM 641 monitoring
(CT:FIN-505; 05-13-2025)
a. Monitoring is a critical component of Federal assistance award management, as it ensures that recipients use the funds for its intended purposes and that the project/program is being implemented as intended in the award Terms and Conditions, and Award Specifics, of the award agreement. Grants officers (GOs), grants officer's representatives (GORs), and program officers (POs) responsible for any given award must monitor recipient performance and compliance.
b. Monitoring techniques include reviewing periodic, annual, and final reports, desk reviews, and interacting with the recipient through meetings, site visits, phone calls, written correspondence, and/or audits. These techniques should be used for all Federal assistance agreements as deemed most suitable and/or necessary by the issuing awarding post or bureau. Program and financial reports are required for grants and cooperative agreements under 2 CFR 200, as detailed in the following sections.
4 FAM 642 performance reporting
(CT:FIN-505; 05-13-2025)
a. Per the requirements of 2 CFR 200.329, the award-issuing bureau or post should clearly communicate the type of information required in the report such as data that reports on metrics (targets aligned with indicators) included in the Federal award. The award-issuing bureau or post must require the recipient to relate project accomplishments to performance goals and objectives of the Federal award. Federal agencies should consider evaluation plans when outlining reporting requirements and only request information that is necessary for monitoring the program.
b. Reports submitted annually by non-Federal entities are due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually are due no later than 30 calendar days after the reporting period. The final performance report submitted by the recipient or subrecipient and pass-through entity are due no later than 120 calendar days after the end of the period of performance.
4 FAM 643 financial reporting
(CT:FIN-505; 05-13-2025)
Per 2 CFR 200.238, recipients must use OMB-approved forms for financial reporting (SF-425) and only the OMB approved government-wide data elements for collection of financial information. Financial reporting must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually or more frequently than quarterly, except in unusual circumstances. Annual reports must be submitted 90 calendar days after the reporting period. Quarterly or semiannual reports are due 30 calendar days after the reporting period. Final performance reports are due 120 calendar days after the period of performance end date or if the award is terminated.
4 FAM 644 records retention
(CT:FIN-505; 05-13-2025)
Per 2 CFR 200.334, the issuing bureau or post and the recipient should, whenever practicable, collect, transmit, and store Federal award-related information in open and machine-readable formats rather than in closed formats or on paper. The issuing bureau or post must always provide or accept paper versions of Federal award-related information to and from the recipient upon request. If paper copies are submitted, the issuing bureau or post or pass-through entity must not require more than an original and two copies.
4 FAM 645 non-Compliance
(CT:FIN-505; 05-13-2025)
a. Per 2 CFR 200.329, these are the types of remedial actions that an issuing bureau or post can take when a recipient or subrecipient fails to comply with Federal statues, regulations, and/or the terms and conditions of a Federal assistance award.
(1) Temporarily withhold cash payments;
(2) Withhold future Federal awards;
(3) Disallow all or part of the cost of the activity or action not in compliance;
(4) Stipulate reimbursements rather than advance payments;
(5) Withhold authority to proceed pending acceptable performance;
(6) Require more detailed financial reports;
(7) Require additional project monitoring;
(8) Require additional prior approvals;
(9) Suspend or terminate award in whole or in part; and/or
(10) Take other remedies that may be legally available, including placing the recipient in "high risk" status.
b. Termination: When a Federal award is terminated, both the Department and recipient remain responsible for compliance with closeout requirements. The Department must provide the recipient with an opportunity to object and provide information and documentation challenging a termination action for non-compliance, in accordance with written processes and procedures published by the Department. The Department is required to report an award terminated prior to the end of the period of performance due to the recipient's material failure to comply with the terms and conditions. They must report to the Contractor Performance Assessment Reporting System (CPARS) to enter information in SAM.gov.
c. Suspension and Debarment: Recipients and subrecipients are subject to the non-procurement debarment and suspension regulations delineated in Executive Order 12549 and Executive Order 12689, as well as 2 CFR 180. The regulations in 2 CFR 180 restrict making Federal assistance awards, subawards, and/or contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards.
(1) A suspension (that may lead to debarment) is issued, per 2 CFR 180.700, when:
(a) There exists an indictment for, or other adequate evidence to suspect, an offense listed under 2 CFR 180.800(a);
(b) There exists adequate evidence to suspect any other cause for debarment listed under 180.800(b) through (d); and
(c) Immediate action is necessary to protect the public interest.
(2) The indictments or offenses listed in 2 CFR 180.800(a) are as follows: "Conviction of or civil judgment for— Commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public or private agreement or transaction; Violation of Federal or State antitrust statutes, including those proscribing price fixing between competitors, allocation of customers between competitors, and bid rigging; Commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, receiving stolen property, making false claims, or obstruction of justice; or Commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects your present responsibility."
(3) The offenses listed in 2 CFR 180.800(b) are as follows: "Violation of the terms of a public agreement or transaction so serious as to affect the integrity of an agency program, such as— A willful failure to perform in accordance with the terms of one or more public agreements or transactions; A history of failure to perform or of unsatisfactory performance of one or more public agreements or transactions; or A willful violation of a statutory or regulatory provision or requirement applicable to a public agreement or transaction."
(a) A suspension for a potential recipient or sub-recipient is effective throughout the Executive Branch of the Federal government and applies to procurement and non-procurement programs. A suspension is a temporary disqualification from all transactions involving the receipt of Federal funds pending an investigation. If a derogatory judgment is reached in a case of suspension, it usually leads to a longer-term debarment.
(b) A debarment means that an individual, organization, and/or its affiliated entities are excluded from conducting business, including receiving Federal assistance awards (and contracts), with any Federal Agency government-wide for a set period of time. Depending upon the outcome of an investigation or legal proceeding, a suspension may lead to debarment.
(4) A debarred or suspended entity (organization or individual) will have its name published as ineligible to receive Federal assistance awards in the System for Award Management (SAM.gov), a GSA-administered, Federal government-wide system for which registration in good-standing is required for all entities requesting contracts or Federal assistance awards. Suspended or debarred entities (recipients, sub-recipients) will be excluded "for the period of their debarment, suspension, or the period they are proposed for debarment under 48 CFR part 9, subpart 9.4." This means the Department of State will not enter into any type of Federal assistance transactions with such excluded persons or organizations during such period, except as permitted pursuant to 22 CFR 513.215 (meaning Foreign Public Entities and/or Public International Organizations).
(5) Costs to an entity (recipient or sub-recipient) resulting from obligations incurred during a suspension or debarment after termination are not allowable (meaning they cannot be claimed or justified in a payment request by a recipient or sub-recipient), except with written authorization of the Department, or if authorized after the suspension has been lifted.
d. Recipient Responsibilities with Regard to Non-compliance: Recipients or applicants for a Federal award must disclose the following to Federal agency in writing and in a timely manner: all violations involving fraud, bribery, or gratuity potentially affecting the award. Failure to report can result in any remedy for noncompliance previously mentioned.
4 FAM 646 audits for federal assistance
(CT:FIN-505; 05-13-2025)
Audit reports are essential tools for Federal assistance stewardship responsibilities. The Department must use Federal funds efficiently and effectively, as the Department is accountable to Congress and taxpayers. Audit reports are a useful tool for monitoring how well recipients manage their finances, specifically regarding the adequacy of its internal controls and its compliance with Federal laws and regulations. However, audits are not set on a specific timetable in the award life cycle, so grants officers (GO) cannot rely on audits as their only monitoring tool. Also, audits are based on risk assessment and sampling, so not every program, grant, or transaction will be reviewed. Audits serve to give Federal agencies reasonable, rather than absolute, assurance that Federal assistance funds are spent according to laws, regulations, and the terms of the award agreement.
4 FAM 646.1 Single Audit and Program-Specific Audits
(CT:FIN-505; 05-13-2025)
a. Under 2 CFR 200.501, domestic recipients and subrecipients that expend $1,000,000 or more in Federal financial assistance during their fiscal year are required to have a single audit (an organization-wide financial audit) or program-specific audit conducted for that year. Recipients that meet the audit threshold must submit these audits to the Federal Audit Clearinghouse (FAC), which collects and disseminates the audit information on domestic recipient organizations to Federal agencies and the public. Additionally, the Uniform Guidance states that single audit requirement also applies to recipients of sub-awards that expend audit threshold in total Federal funds in their fiscal year. Any findings such as material weaknesses, significant deficiencies, or material noncompliance are reported on the SF-SAC.
1) Single Audit was previously referred to as an OMB Circular A-133 Audit.
2) Often Major Programs are the subjects of Single Audits.
b. Single Audit Applicability to Foreign Recipients: Effective October 1, 2024, all foreign non-profit and for-profit organizations that expend $1,000,000 or more in Federal funds in the organization’s fiscal year, whether as a prime recipient or a subrecipient, must perform a recipient contracted single or program-specific audit.
c. The audits must be independently and professionally executed in accordance with Generally Accepted Government Auditing Standards either prescribed by a government’s Supreme Audit Institution with auditing standards approved by the Comptroller General of the United States, or in accordance with the host country’s laws or adopted by the host country’s public accountants or associations of public accountants, together with generally accepted international auditing standards. However, foreign entity audits consistent with International Standards for Auditing or other auditing standards are acceptable with the GO’s approval. This requirement does not apply to Foreign Public Entities.
4 FAM 646.2 Additional Types of Accounting and Audit Standards
(CT:FIN-505; 05-13-2025)
a. There are many additional audit and accounting standards beyond the Single Audit. These standards vary across the world. Examples of accounting standards for reporting financial information include the International Financial Reporting Standards, Generally Accepted Accounting Principles, and other country-specific variations such as the Luxembourg Generally Accepted Accounting Principles. As a result, a wide range of audit reports and financial statements exist internationally.
b. Financial Statements and Organizational Audits: Many organizations not meeting the audit threshold outlined in the Uniform Guidance conduct a yearly audit review of their finances as part of their policies and procedures. Financial statements or organizational audit reports are an appraisal of an organization’s financial status. An independent accountant reviews the organization's assets and liabilities and gives their expert opinion on the organization's financial health.
c. Department of State's Office of Inspector General (OIG): The OIG conducts financial and performance audits of organizations receiving Federal assistance from Department bureaus and posts. These audits are posted on the OIG website. On occasion, the USAID OIG provides joint audits of a recipient receiving both USAID and Department Federal assistance funding. OIG separately reports those findings appropriate to Department recipients.
d. The U.S. Government Accountability Office (GAO): GAO periodically conducts primarily performance audits of organizations receiving Federal assistance from U.S. Government agencies. GAO also conducts reviews on assistance in specific countries and regions, and on other topics in this field. Copies of these reports can be found on the U.S. Government Accountability Office website.
e. OMB Circular A-123: In addition to the audits mentioned above, the Department’s independent and internal auditors conduct reviews of grant-related transactions. Both audit groups develop findings, if applicable, related to the reporting of financial assistance in the Department’s financial statements, and may identify issues that impact grantee monitoring and close-out. Findings by the independent auditor, which may include significant issues (either Material Weaknesses or Significant Deficiencies), are contained in their Independent Auditor’s Report, which is published in the Department’s Agency Financial Report (AFR). For the internal auditors, who conduct audits in compliance with OMB Circular A-123, the findings are reported to CGFS/FPRA/FAFM.
4 FAM 646.3 Pre-Award Phase Due Diligence for Audits
(CT:FIN-505; 05-13-2025)
a. When evaluating a potential recipient and their application during the due diligence process in the Pre-Award Phase, the GO must determine if previous audits have indicated any deficiencies, weaknesses, fraud or other problems in the management of other Federal assistance awards. Such findings are an excellent indicator of whether the organization:
(1) Has managed similar projects/activities in the past;
(2) Is financially stable;
(3) Has adequate management controls in place; and
(4) Has the organizational capacity for successfully implementing a grant or other Federal assistance activity.
b. If the organization’s applicable audits present audit findings, the GO is responsible for reviewing the findings, requesting additional information from the applicant if needed and determining if the organization or individual is able to complete the award to the satisfaction of the Department. The GO may impose additional requirements, such as additional monitoring, Special Award Conditions, placing a recipient in “high risk” status, or adding prior approval requirements to lower or limit the risk identified by the audit finding.
4 FAM 646.4 Post-Award Phase Monitoring Under Audits
(CT:FIN-505; 05-13-2025)
a. Audit reports are a useful way to monitor a recipient's financial performance, especially in terms of: determining the annual single audit submission requirements of recipients or sub-recipients of multiple year awards; assessing the rigor of their internal controls (per 4 FAM 633); and measuring compliance with all relevant Federal laws and regulations. This type of review should be performed annually by relevant grants management officers for each year of an award's period of performance.
b. Audit reports may also be reviewed in advance of site visits, the issuance of amendments, or when considering other award actions. Audits should be used to adjust the level of monitoring required or to propose additional award requirements if it is determined a particular project or program has a higher level of risk than initially anticipated. Separately, new audit reports published in connection with your recipient’s performance on other Federal awards need to identify problems that could be similarly occurring with your award.
4 FAM 646.5 Closeout Phase Questioned Costs for Audits
(CT:FIN-505; 05-13-2025)
Audits of a recipient or award that occur during or after the period of performance may result in the disallowance of costs incurred and the establishment of a debt to the Department of State, as mentioned in 4 FAM 633.6. Therefore, all officers working on a given award must ensure that recipients respond to all audit findings and recommendations with adequate explanations and supporting evidence.
4 FAM 646.6 Audit Review, Appeal, and Management Decision
(CT:FIN-505; 05-13-2025)
a. Additional information related to the Department's responsibility in the review of Single Audit reports can be found in 4 FAM 690.
b. Within the Department, the Office of Federal Assistance Financial Management (CGFS/FPRA/FAFM) serves as the official liaison with the Federal Audit Clearinghouse (FAC) on Single Audit resolution audits. CGFS/FPRA/FAFM downloads and reviews audits from the FAC and informs relevant programming offices of any findings related to their awards.
c. The GO in the relevant programming office is responsible for issuing a Management Decision on audit findings (that come from an independent auditor) within six months of receipt of the audit report. The Management Decision shall clearly state whether the audit finding is sustained (meaning the GO agrees with the findings in the audit report), the reasons for the decision, and the expected auditee action to repay disallowed (unallowed) costs, make financial adjustments, or take other action. If the GO accepts the audit report’s findings, they must inform the recipient of the required actions, like repaying disallowed/unallowed costs, and then follow up to ensure the recipient completes these required actions.
4 FAM 647 through 649 unassigned