What may result from a lack of compliance monitoring by a pass-through entity?

The correct answer, potential loss of grant funding, highlights the critical importance of compliance monitoring by pass-through entities in the grant management process. Pass-through entities, which distribute federal or state funds to sub-recipients, have a responsibility to ensure that those funds are used in accordance with applicable laws, regulations, and the terms of grant agreements. When there is insufficient compliance monitoring, it can lead to mismanagement or misuse of funds by sub-recipients.

As a consequence, funding agencies may view this lack of oversight as a breach of fiduciary duty or a failure to ensure accountability. This can result in the loss of current funding or restrictions on future funding opportunities. Funding bodies expect pass-through entities to actively monitor their sub-recipients to safeguard public funds and ensure that they are used effectively for intended purposes. Therefore, without robust compliance monitoring, there is a high risk of non-compliance, which could jeopardize the entire funding structure.