Per federal accountability standards, a large state department of transportation (DOT) was required to conduct risk assessments on organizations receiving federal funds for transportation projects. North Highland helped the client build a Subrecipient Monitoring Program that would ensure ongoing future compliance with these federal standards.
A Public Sector Case Study
The client, a state department of transportation (DOT), had received repeat findings from a state audit related to compliance with requirements for the administration of federally-funded awards to Subrecipients. The audit’s findings indicated that the client did not have a sufficient program to monitor Subrecipients who received federal awards for transportation projects. The monitoring program requires the client to perform ongoing risk assessments for organizations receiving federal funds, and in doing so, making sure the level of monitoring is sufficient for how the organizations spend the federal funds they receive. For this program, the DOT is a “Pass-Through Entity,” providing federal funds to local agencies who serve as the “Subrecipients” of federal dollars who work with vendors to complete projects.
The client engaged North Highland to help assess the current state of organizational activities against these audit findings and develop internal processes and procedures that would build a successful monitoring program, ultimately ensuring ongoing future compliance with federal accountability standards.
The North Highland project team approached this work in several phases, beginning with a high-level analysis of current compliance with specific federal requirements and gaps that led to the audit findings. The team reviewed the gaps with the client and coordinated with federal stakeholders to design a solution that would be sustainable and meet the requirements. Key deliverables included a compliance matrix against specific federal requirements and an overarching framework of how the monitoring program would function.
In building the framework for ongoing risk assessment across the local agency’s activities, North Highland developed a comprehensive Subrecipient Risk Assessment Manual, including process flows as well as a RACI matrix for roles and activities across the program. The manual offered standard language explaining the scope, methodology, and instructions to DOT division stakeholders when monitoring Subrecipients. It provided a self-guided checklist that enabled consistent, repeatable monitoring processes. It also guided these contacts to summarize key findings, data points, and corrective actions to comply with associated federal accountability standards.
To build a sustainable program for ongoing monitoring, the project team also refined as well as developed a series of tools and templates, including a Subrecipient Risk Assessment Tool, Subrecipient Determination Tool, Subrecipient Monitoring Selection Tool, Performance Report Template, and Subrecipient Monitoring Report Template. North Highland set clear definitions around the cadence of Subrecipient monitoring, recommending that DOT division stakeholders monitor higher-risk Subrecipient projects more frequently (e.g. quarterly) than low-risk activities (e.g. annually).
Key deliverables included a compliance matrix against specific federal requirements and an overarching framework of how the monitoring program would function.
The initial analyses and changes that North Highland facilitated accomplished the client’s goal: in the months following North Highland’s work, the DOT received no audit findings related to the Subrecipient Monitoring Program. Equally important, the project team embedded foundational capabilities for overall local agency engagement that continue to improve as staff evolve and grow the program. By developing re-usable tools within the current environment, accompanied by detailed instruction and training, North Highland’s work supported a positive implementation of the program across both headquarters and the regions across the state.
As the client evaluates other federal funding requirements and priorities, North Highland’s work helped to build a foundation for program growth and development. In working with a variety of federal and state partners, this program also provided a successful model for the client’s other divisions and offices to utilize in their compliance and performance improvement efforts.