OMB builds strategy to better target grant fraud, error and waste

There are eight circulars that govern how agencies should oversee grant programs.

The multiple requirements developed over the last few decades create a lack of consistency and a level of complexity that put grant programs at risk for improper payments.

“We have an entire set of requirements that dictate how grant funds are audited at the state and local level,” said Danny Werfel, the controller at the Office of Management and Budget. “So, we took a look at those audit requirements and we started a process of working with the relevant stakeholders — state governments, local governments, universities, non-profits, etc. We said ‘How can we refine these audit requirements in a way that makes them more powerful and more effective at uncovering potential fraud, error and waste?'”

Werfel told The Federal Drive with Tom Temin how the administration plans to make grant program oversight more effective.

Last week, OMB released a set of proposals that would change the way the agency audits federal grant dollars in the field to help cut down on potential fraud, error and waste.

Danny Werfel, controller, Office of Budget and Management (OMB)
Currently, OMB’s auditors are spread evenly across low-dollar and high-dollar grants. “The first thing we would do is shift the audit footprint in a way to get at higher dollars and change the audit threshold to make sure more auditors and more audit activity are surrounding higher-dollar grants and higher-dollar activities,” Werfel said.

Under the new approach, OMB would streamline the types of questions agencies ask and the types of issues they review.

“Right now, if you go through the manual that auditors use to check on federal dollars at the state and local level, you find a lot of questions that are asked that don’t always drive to that bottom line question of, ‘Is this money being used for the right purpose?'”

Currently, OMB tracks government error through improper payment amounts, comparing grant figures with individual benefits and contractors. All of that information is available at

“The goal here is to make sure at every level we are doing what we can to drive improper payments down,” Werfel said. “There are different points in the process where people have to be doing their job, applying more elbow grease, looking at things with greater scrutiny to make sure that our payments are correct.”

Once OMB finishes reviewing comments in the next 30 days, it will release proposed changes to the circulars, integrating them into a single circular focused on grants and then re-releasing that for comments as well.

“There will actually be a second opportunity for comment,” Werfel said. “These are really important changes, ones that we don’t take lightly. We’re really about participatory government and want the involvement of the broadest possible range of stakeholders.”

Once the last round of comments is collected, OMB expects to issue the revised comprehensive circular in the summer.


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