How Strong Is Your Grant Compliance Framework?
Grant requirements can be complicated. Developing a systematic grant management program provides a framework to mitigate against noncompliance. A sound framework includes five main elements. Answering the following questions will help identify areas you may need to strengthen to ensure your organization’s compliance.
Who is your grant administrator?
This seems like a simple question, but if an organization only has a few grants, grant administration may be one of many roles. Or, responsibility may be shared among several roles. That situation works until the size of the organization and the complexity of the grants make responsible grant management impossible.
When the responsibility and complexity of grant management becomes too demanding to include as one of many responsibilities, it’s time to identify one person to take the lead. Eventually, that person may build the team responsible for overseeing and coordinating grant administration.
It is easy to see the benefits of having one person develop the full knowledge of grant requirements and take responsibility for establishing policies and procedures for the organization. This person provides guidance for the organization and monitors compliance requirements. They also serve as the point person for grant related audits.
Do you have policies and procedures for grant administration?
A grant administrator’s first priority is to develop policies and procedures that outline each step in the lifecycle of the grant. Typically, this document will answer the following questions:
- Who approves grant applications?
- Who executes grant agreements?
- What systems will be used to track grant activities, such as qualifying expenses, reporting dates, performance metrics (both financial and programmatic)?
- What documentation is required for compliance?
- Who reviews and approves grant activities to ensure compliance?
- Who develops and manages a schedule and process for annual financial reporting (financial statements and grant reporting, e.g., single audit)?
- Who is responsible for training staff in grant requirements?
- Are subrecipient contracts standardized, and do they comply with your responsibilities as a grantor?
- Who is responsible for resolving audit findings?
Are you prepared for grant reporting?
One of the key responsibilities of a grant administrator is to manage deadlines (monthly, quarterly, biannually, annually, and grant close out). In addition to the initial application deadline, grants require consistent attention. You need to file updates and reports throughout the life of the grant, and they will often require specific documentation. The information in these reports must be complete, accurate, and filed promptly. If they are not, you can count on the grantor requiring you to follow-up and resolve the issues.
Do you have the resources to monitor activities?
It’s true, monitoring grants is a full-time job. Or it should be.
Being awarded a grant is the first chapter of a long story. The rest of the tale involves using the grant for its intended purposes and documenting that fact. Responsible monitoring and documentation require time, energy, systems, and personnel.
Someone should be assigned responsibility for the continuous monitoring and evaluation of grant administrative policies and procedures. This involves looking for changes in grant requirements communicated by the grantor.
For subrecipients, the grant administrator must convey the expectations about their activities and then monitor the progress toward the stated goals. On-site visits will sometimes be necessary and require time. Verifying the status of periodic reporting responsibilities can also take up resources that may already be scarce.
The final chapter of monitoring activities is to develop a clearly defined plan for responding to audit findings. Depending on the complexity of the findings, resolving these issues can require rewriting procedures, documenting changes, and verifying the implementation.
Are you ready for an audit?
While this may seem obvious, knowing your requirements should be the first step in preparing for the possibility of an audit.
In addition to reviewing grant requirements, look back at your prior year findings to confirm that they were fully resolved. If they were not, they need to be addressed immediately.
The next step in being prepared for an audit is to ensure all necessary documentation is complete and accurate. Your documentation should demonstrate compliance with the grant requirements. Usually, your materials will need to include evidence of internal controls that supports the process of reviews and approvals. Internal policies and procedures should be easily accessible. (Thankfully, once this document is complete, it only needs to be updated going forward.) When these items are assembled, make sure all reconciliations connected to the grant are complete.
Once the preparations are made, the hardest part of an audit is done. You will still need to meet with auditors and discuss expectations, timelines, and requests for information, but these are more scheduling and time management issues. If your paperwork and systems are in good order, your work will consist mainly of providing evidentiary support, and possibly providing explanations on details that may not appear obvious to an outsider.
Continuously improving you grant compliance processes
With a lot of subjectivity in the process of managing grants, along with requirements changing on a regular basis, it is important to continuously evaluate the adequacy of your grant administration policies and procedures. So, no matter what your situation is, your processes can always improve, and any deficiencies can be remediated. But it takes commitment as an organization to devote the resources to do the ongoing work of grant compliance
Many state and local governments have compliance questions about the federal grants that were distributed during the pandemic. The reporting rules of these programs are complex, and requirements continue to evolve.
MGO’s state and local government professionals can help answer questions about these federal grants and help organizations document their systems of internal controls, improve their audit preparation, and address audit findings. Contact Linda Hurley at 949.296.4340 or firstname.lastname@example.org for more information on how to improve your grant compliance processes.