HHS Cracks Down on Years of Unchecked Audit Findings

New Initiative Holds States and Grantees Accountable for Persistent Audit Failures Across HHS-Funded Programs

WASHINGTON — May 21, 2026 — The U.S. Department of Health and Human Services (HHS), through the Office of the Assistant Secretary for Financial Resources (ASFR), today announced the launch of AERO — the Audit Enforcement and Risk Oversight initiative — a department-wide program integrity effort designed to hold states and grantees accountable for persistent audit noncompliance. In a formal letter to all 50 state governors and treasurers, HHS is putting states on notice that chronic audit noncompliance, unresolved findings, and delinquent audit submissions will no longer be tolerated, and warning that states with delinquent submissions or persistent unresolved findings should expect further communication in the coming weeks.

“Taxpayers deserve to know that their dollars are being spent as intended,” said Gustav Chiarello, HHS Assistant Secretary for Financial Resources and Chief Financial Officer. “Years of audit reports documented serious vulnerabilities and failures in oversight, yet states and grantees faced little to no consequences. Following revelations of fraud in various states, we examined their audits more closely and found years of unresolved findings hiding in plain sight. Grantees who want to work with us to fix these problems will have a partner. Those that don’t may face consequences.”

Powered by next-generation AI analytical tools, ASFR is conducting a comprehensive, ongoing analysis of single audit information across all 50 states examining at least five years of audit history. Initial findings reveal states and grantees have consistently failed to remedy serious internal control issues, with some persisting for three, four, or even five or more years. Hundreds of HHS grantees have not submitted their required audits, with some late by more than two years. Prior enforcement efforts have failed to produce meaningful compliance, leaving federal dollars vulnerable to waste, fraud, and abuse.

HHS will take decisive action to protect taxpayer funds by leveraging powerful government-wide authorities — including the Single Audit Act, 31 USC 7501-7507, and the Uniform Guidance at 2 CFR Part 200 — to hold recipients of federal funds accountable when they fail to submit required audits or repeatedly fail to address weaknesses identified in audit findings. HHS is also examining whether audits are being conducted with sufficient rigor to detect vulnerabilities in the first place. This effort marks the latest Trump administration action to instill real, lasting reform in the federal funding oversight process, ensuring that potential indicators of waste, fraud, abuse, and misuse of federal funds are treated seriously and dealt with in a timely manner.

While it is too early to estimate the full financial savings this effort will yield, AERO is fundamentally about bringing accountability and transparency to a federal funding process that has historically lacked either.

HHS will work collaboratively with states and grantees to resolve their audit findings and implement proper internal controls to safeguard federally funded programs from waste, fraud, and abuse. For those who are unwilling to address their findings, HHS will seek any and all remedies permitted under the law, including but not limited to:

• Temporarily withholding payments until the recipient or subrecipient takes corrective action;
• Disallowing costs for all or part of the activity associated with the noncompliance of the recipient or subrecipient;
• Suspending or terminating the award in part or its entirety;
• Initiating suspension or debarment proceedings as authorized in 2 CFR part 180 and the Federal agency’s regulations, or for pass-through entities, recommending suspension or debarment proceedings be initiated by the Federal agency;
• Withholding future federal funds (new awards or continuation funding) for the project or program; and/or
• Pursuing other legally available remedies;

Background

Under federal law, non-Federal entities, including states, local governments, nonprofits organizations, and institutions of higher education that expend $1,000,000 or more in federal funds annually are subject to audit requirements under the Single Audit Act and Uniform Guidance, which are designed to help ensure federal funds are properly managed and accounted for. Under 2 CFR 200.513(c), HHS is required to ensure audits are completed and submitted in a timely manner, and to follow up to ensure non-Federal entities take appropriate and timely corrective action. HHS’ review of single audit information has identified longstanding repeat findings, unresolved internal control deficiencies, and delinquent audit submissions affecting HHS-funded programs. The AERO initiative ensures these issues affecting HHS-funded programs are identified, addressed, and resolved in a timely manner.

For more information about AERO and HHS program integrity initiatives, visit https://www.hhs.gov/about/agencies/asfr/finance/hhs-single-audit/index.html. If you are a state or grantee and wish to contact HHS about your audit, please contact AuditResolution@hhs.gov.