Why Grant Deadline Pressure Increases Potential Fraud Risk 

July 31, 2025

As grant programs near their obligation and expenditure deadlines, the pressure on administrators, program managers, and stakeholders often intensifies. With looming deadlines, there’s a natural tendency to accelerate processes, make quick decisions, and sometimes take shortcuts to ensure that funds are fully utilized. However, this rush can lead to significant risks, particularly the increased potential for waste, fraud, and abuse (WFA). 

The closer a grant program gets to its deadline, the more likely it is to experience deviations from established internal controls and the emergence of arbitrary and capricious decision-making. But why does this happen, and how can we mitigate it? 

The Pressure of Deadlines: A Recipe for Risk 

Deadlines are an inevitable part of grant management, but when approaching, they can become a double-edged sword. While it’s crucial to adhere to timeframes, the pressure to obligate funds and expend them properly often leads to behavior that bypasses the established processes. This is particularly true in complex programs where numerous compliance checks and internal controls are in place to safeguard against improper use of funds. 

As these deadlines approach, there is often a temptation to forgo the meticulous attention to detail typically required. This sets the stage for deviations from internal controls—the very mechanisms designed to protect the integrity of the funds and ensure proper program delivery. Here’s how:

1. Weakening of Internal Controls:

Internal controls are meant to create a system of checks and balances that help monitor how funds are allocated, used, and accounted for. These controls include proper documentation, audits, adherence to spending guidelines, and ongoing monitoring of expenses. As deadlines approach, the urgency to move quickly may cause program managers to overlook or bypass these controls. 

• Example: Program managers may approve expenditures without thoroughly verifying the eligibility or necessity of the purchases, simply to meet the expenditure deadline. 

• Risk: The weakening or suspension of these controls significantly increases the likelihood of waste, such as funds being spent inefficiently or inappropriately, and fraud, where funds could be intentionally misused or misdirected.
  

2. Arbitrary and Capricious Decision-Making:

As the clock ticks closer to the final day for fund obligation or expenditure, some decision-makers may resort to arbitrary or capricious actions. This can involve making hasty, unconsidered decisions about how or where to allocate remaining funds—often with little regard for the intended purpose of the grant. 

• Example: An agency might fund a project that was not part of the original scope, simply because it appears to be an “easy” way to spend the remaining funds, without considering the long-term viability or strategic alignment of the decision. 

• Risk: This kind of decision-making can create a situation where abuse occurs—whether intentional or not—because decisions are made with little oversight, no clear rationale, and no consideration for whether the expenditure will truly address the program’s goals.
  

3. Lack of Documentation and Oversight:

When decisions are made under time constraints, documentation and oversight often become secondary considerations. Normally, thorough documentation, audit trails, and oversight processes provide a level of transparency that helps identify potential issues before they arise. However, with the growing pressure to meet deadlines, decision-makers might rush through approvals, skip important documentation steps, or fail to conduct proper oversight. 

• Example: Rather than adhering to the usual competitive bidding process or requesting multiple quotes, administrators might approve a contract quickly to ensure the funds are spent before the deadline, bypassing the necessary checks and balances. 

• Risk: The lack of documentation or oversight creates a loophole that allows for fraudulent practices, such as unauthorized expenditures or the misallocation of funds.
  

4. Increased Opportunities for Fraudulent Behavior:

The accelerated pace of decision-making, combined with a relaxed approach to oversight, creates an environment ripe for fraud. As internal controls weaken and decision-making becomes more reactive, the potential for individuals or entities to exploit the system grows. 

• Example: A contractor or grantee may take advantage of the situation by inflating invoices, submitting falsified claims, or using grant funds for ineligible activities, knowing that they can get away with it due to the lack of scrutiny. 

• Risk: Fraudulent behaviors like these can be difficult to trace, especially when there is pressure to meet the deadlines quickly. Fraud can go undetected until after the funds have been spent, which could lead to long-term financial and reputational damage.
  

5. Waste from Unspent Funds:

Ironically, the push to spend all funds by the deadline can also result in waste. In an attempt to avoid returning unused funds to the federal government, grantees or program managers might make unnecessary purchases or fund projects that were not part of the original plan—simply to meet the obligation requirements. 

• Example: A school district may purchase computers or equipment they don’t need just to meet the spending target, even though those items will never be used in the classroom. 

• Risk: This waste undermines the integrity of the program and means that valuable resources are not being used in a way that maximizes their impact. 

How Can We Mitigate These Risks? 

1. Planning Ahead: Early planning is the key to mitigating rushed decision-making. By starting grant programs well before the deadline and ensuring that sufficient time is allocated for compliance checks, budgeting, and approvals, agencies can avoid the pitfalls of rushing. 

2. Continuous Monitoring: Monitoring funds and expenditures on an ongoing basis allows for early identification of any potential issues, ensuring that the final rush to meet deadlines doesn’t lead to significant problems. 

3. Training and Oversight: Regular training for staff on the importance of maintaining internal controls and following procedures—even at the final stages of a program—helps prevent lapses in judgment and behavior. Agencies should also consider increasing oversight in the final months to help ensure accountability. 

4. Transparency and Accountability: Increasing transparency around decision-making processes, particularly at the end of grant cycles, and requiring detailed documentation of all expenditure decisions, can help deter arbitrary and capricious actions. 

Conclusion: The High Cost of Rushed Decisions 

As deadlines approach, the risk of waste, fraud, and abuse increases exponentially when internal controls are relaxed and decision-making becomes more arbitrary. By recognizing the dangers of this pressure and taking proactive steps to address these challenges, grant administrators can reduce the likelihood of these risks—and ensure that public funds are being used efficiently and effectively to meet the program's objectives. 

The key to success lies in sustained vigilance, early preparation, and maintaining integrity throughout the lifecycle of the grant, even when the finish line is in sight. 

Managing grants efficiently, without compromising compliance and integrity, can be a challenging task. If your organization is navigating the complexities of grant management, we can help you enhance oversight, streamline processes, ensure outcomes and reduce the risks of waste, fraud, and abuse. Reach out today to learn how our expertise in grants management can ensure your programs meet their goals, stay compliant, and make the best use of taxpayer dollars. 

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