What the state checks when it monitors an NSGP award

Why the state monitors your subaward

FEMA awards NSGP funds to the State Administrative Agency (SAA), the pass-through entity. The selected nonprofit is the subrecipient. The FY2026 NSGP notice of funding opportunity requires each SAA to follow 2 CFR 200.331 through 200.333. Under the 2024 numbering of those rules, 200.331 sets the test for whether a recipient of funds is a subrecipient or a contractor, 200.332 holds the pass-through entity's monitoring duties, and 200.333 covers fixed-amount subawards.

Under 2 CFR 200.332, the SAA reviews financial and performance reports and sets additional monitoring according to risk. Relevant factors include experience with similar awards, prior audit results, staff or system changes, and federal monitoring results. FEMA and authorized federal reviewers also may inspect pertinent records and interview staff (2 CFR 200.337). The nonprofit remains responsible for monitoring its own award activities under 2 CFR 200.329.

Desk review or site visit

A desk review examines the records the nonprofit submits. A site visit lets the monitor inspect the project location, equipment, and source records there; either review may include interviews (FEMA, methods of monitoring). The SAA chooses the format and schedule. Florida, for example, reserves the right to conduct either type "at all reasonable times" (FDEM onboarding guide, FY2023–2024); see Florida security grants for state-specific procedures.

FEMA's training says the SAA generally sends a notice identifying the award, timing, records requested, and people who should attend (FEMA, monitoring notification). Confirm the response deadline and designate staff who know both the project and the accounting. The FY2026 NOFO requires timely and accurate responses to DHS information requests.

Records the monitor asks for

The SAA's list controls, but a monitoring request commonly includes:

• The signed subaward, amendments, approved budget, special conditions, and written approvals, including environmental and historic preservation clearance where required. See NSGP EHP review.
• The procurement history for each contract: method and contract type, solicitations and responses, cost or price analysis, selection or rejection, and the basis for price. See NSGP procurement requirements.
• Purchase and payment records. The NOFO names specifications, solicitations, quotes, selection decisions, purchase orders, contracts, invoices, and cancelled checks. See NSGP reimbursement claims.
• Financial and performance reports, accounting records, and the written procurement, conflict-of-interest, and financial management policies used for the award.
• Property records, prior audits, earlier corrective action plans, and award correspondence (FEMA, monitoring documentation).

Equipment has to match the claims

A site visit may compare the approved budget and claims with what was installed. Under 2 CFR 200.313, grant-funded equipment must remain in its authorized use and may not be disposed of or encumbered without the required approval. Its property record must show:

• a description and serial or other identification number;
• the funding source, including the Federal Award Identification Number;
• the title holder, acquisition date and cost;
• the federal share of the purchase price;
• the item's location, use and condition; and
• disposition date and sale price, when applicable.

Reconcile a physical inventory to those records at least every two years and investigate loss, damage or theft. Maintaining the inventory is an allowable M&A activity within the 5% limit on each nonprofit subaward (FY2026 NOFO, Management and Administration Costs).

2 CFR 200.1 defines equipment as property with a useful life over one year and a per-unit acquisition cost of at least $10,000, or the nonprofit's lower capitalization threshold. The subaward may require tracking for lower-cost supplies as well. Keep the location and status of every funded item current, and obtain written approval before a change causes the installation, budget or EHP record to stop matching the site.

Accounting records and the people who keep them

Monitoring covers financial administration and project results. Under 2 CFR 200.302, the accounting system must identify each federal award and show the amount, source, and use of its funds with supporting records. Recording reimbursements as donations or grant purchases only in general expense accounts makes that demonstration difficult. Track each subaward separately, including amounts due from the SAA.

Staff changes increase monitoring risk when one person holds the records and history. The nonprofit's Authorized Organization Representative must be its own officer or employee; a consultant cannot serve in that role. Submit a replacement's information to the SAA for approval when the assignment changes (FY2026 NOFO, Personnel and Additional Reporting Requirements). At least two officers or employees should understand the award well enough to answer the monitor.

Findings and corrective action

The SAA generally issues a written result after the review. A finding should identify the requirement, the problem, and the action needed; the corrective action plan sets the response and evidence expected (FEMA, corrective action plan). Meet the stated deadline and keep proof that the correction was completed.

If a problem persists, the SAA may impose specific conditions under 2 CFR 200.208, including reimbursement-only payment, added reports, closer monitoring, or new prior approvals. 2 CFR 200.339 also permits remedies such as withholding payments, disallowing costs, or suspending or terminating the award. The FY2026 NOFO disqualifies a future subapplicant with a history of poor grant administration, so unresolved findings can affect another application.

Monitoring and audits are different reviews

Monitoring is the SAA's ongoing oversight of a particular subaward. An audit is a separate examination by an inspector general, the Government Accountability Office, the pass-through entity, or an independent auditor. It may cover the award's costs and the nonprofit's compliance, but a site visit is not itself an audit.

The reviews still intersect. Under 2 CFR 200.332, the SAA must verify that required audits occur and issue a management decision on audit findings tied to its subaward. The single-audit threshold depends on the nonprofit's total federal spending for the fiscal year, not the size of one NSGP award: $1,000,000 or more in federal awards expended, for fiscal years beginning on or after October 1, 2024 (2 CFR 200.501(a)). A required audit is filed with the Federal Audit Clearinghouse within 30 days after the nonprofit receives the auditor's report or nine months after its fiscal year ends, whichever is earlier (2 CFR 200.512(a)(1)). Single Audit requirements explains how federal spending is counted and what the audit involves.

How long to keep the file

Keep award records for at least three years from the applicable final financial report (2 CFR 200.334). An audit, claim, litigation, or written extension can lengthen that period. Property and equipment records must remain for three years after final disposition, so part of the file stays open while equipment remains in service.

Ask the SAA which submission starts the retention clock if the subaward does not say. FEMA's access rights continue for as long as the nonprofit keeps the records under 2 CFR 200.337(c). The post-award guide covers closeout and the rest of the award lifecycle.