This page is part of our decision support tool.
Monitoring is about collecting information and assessing it. If a government organisation (‘funder’) has a financial agreement with an external organisation (‘provider’), the funder must monitor the provider to ensure regularity, propriety and value for money. Monitoring, both internally for providers and externally for funders is an element of good management practice. But monitoring can be excessive. Seeking to promote good practice in monitoring, the Government and National Audit Office have said:
Funding bodies should seek to minimise the monitoring and inspection burden on the recipients of funds to a level proportionate to the level of funding and risk, and which maintains proper control of public monies. [Footnote 1]
The Government has expanded on this in its principles of proportionate monitoring. The term we use for putting into practice the principles of good monitoring, and for avoiding the pitfalls of poor practice in monitoring, is ‘intelligent monitoring’. We have developed further guidance on how to intelligently monitor your financial relationships with third sector organisations.
Follow good practice around proportionality and risk management in both monitoring and evaluation. Seek to minimise the burden on providers, while maintaining proper control of use of public money. However, do not lead a provider to believe that it will never be monitored.
Understand the cost of the monitoring and evaluation schemes that you agree with providers. Under full cost recovery, you should finance the provider for the portion of these costs that fall to it [see Build in full cost recovery].
Although establishing a monitoring and evaluation scheme is shown as the final decision in designing the funding model, it is never too early to begin to think about it. You may need to consult potential providers at this point. Establishing monitoring and evaluation should never be left until implementation [Stage 4].
Evaluation is the assessment of the extent to which the programme has met its objectives. This will help you and others improve the design and operation of the programme and design new programmes. As with monitoring, evaluation needs to be ‘intelligent’.
There are two sorts of evaluation:
- Summative evaluation makes the assessment after the programme has been in operation for some time or is completed; the length of time can be derived from the timescale element of the objectives of the programme
- Formative evaluation assesses the programme as it is being put in place and during its early operation.
- Design the evaluation scheme for your programme at its outset; otherwise you will find it hard to establish the effect it has had
- Embed the evaluation scheme into your agreements with providers
- Integrate, as far as possible, the demand for, and the collection of, information under the evaluation scheme with those that arise frommonitoring requirements.
Fraud and counter-fraud
Funding relationships with any outside organisation are potentially open to abuse by fraudsters. You should consider the potential impact of fraud on your funding programme and address the following aspects as necessary:
- Information should be provided to applicants on the organisation’s policy on fraudulent claims, for example by specific references in grant application information
- Where intermediaries exist, their briefing and contracts need to contain appropriate provisions for dealing with fraud so that all parties are aware of their roles and responsibilities for the prevention, detection and reporting of fraud
- Grant schemes should be specifically fraud-proofed, particularly against the risks of multiple applications either to one organisation or to a number of different funders
- Counter-fraud measures should not only cover the higher risk grants but should also ensure that all grants have a chance of detailed review, although the extent of coverage of lower risk grants should be less
- Where third parties are involved in the award or payment of grants, organisations should overtly assess the third party’s counter-fraud measures.
Your organisation’s internal audit team and other functions such as a fraud investigation team have a key role in providing advice on counter-fraud measures.
- HM Treasury’s ‘Guidance to Funders (pdf – 696KB)‘ provides further detail on the needs of auditors.