It’s the nightmare scenario!
Picture grant funds flying out the door with seemingly little or no oversight?
(Remember the “bad” part of the ARRA funding days in 2009?)
The stories in the press certainly give the impression that good grants frequently go bad as you witness headline after headline talking about grant mismanagement and the latest Inspector General report.
To paraphrase Nobel Prize-winning singer/songwriter Bob Dylan: “The times they are a-changing.”
The new grant regulations in 2 CFR Part 200 call for federal agencies to conduct a risk assessment prior to awarding federal funds to minimize the risk of waste, fraud, and abuse of taxpayer dollars.
And this new requirement has kicked in across all the federal funding agencies along with a focus on the performance of grant recipients.
Federal Grants: Look Before Leaping
So if you want to get more federal grants dollars in the future, get ready for more up-front scrutiny by the federal agencies.
The new risk assessment is just one of the many changes happening with the new grant regulations contained in the new Uniform Guidance aka the “Super-Circular.”
Risk Assessment: Here are 10 Things to Check
The new grant regulations in 2 CFR Part 200 call for federal agencies to establish a framework for the risk assessment but stop short of giving grant recipients a checklist to follow.
Do you feel like that leaves you guessing what is required?
Fortunately, the new guidance provides several tips on what to focus on.
• Ability to meet management standards
• Amount of monitoring already in place with other federal agencies or prime recipients
• Evaluation of the application for the funding opportunity
• The extent of new personnel or changed systems
• Past history of performance for federal awards and subawards
• Previously submitting applicable reports in a timely manner
• Prior compliance with award terms and conditions
• Quality of the management systems
• Results of audits such as findings and questioned costs
• Stability of finances at the organization
These ten areas will take you far on the process with common sense areas to focus on for your grant preparedness and subrecipient monitoring requirements.
Assessment of Risk: Past Performance = Present Risk
There are several aspects of the risk assessment that we all can agree are important, both for Federal agencies and pass-through entities who are also required to perform this review on their sub-recipients.
Here are a few common criteria:
• Financial stability of the grant applicant
• Quality of management systems in place
• Solid history of performance on past awards
As you can see, organizations with past success in grant management and performance are better positioned to receive more awards in the future.
But after agreement on these basic measurements, the consistently of the assessment methods diverge wildly.
Pass-through Entity Have Even More Responsibilities
If you are a pass-through entity you get to step into the shoes of the federal government and review the risk posed by your subrecipients as well!
Essentially you “step into the shoes” of the federal agency to ensure federal funds are flowing to a sub-recipient who is willing and able to comply with Federal regulations, and the terms and conditions of the sub-award.
This new part of the regulations is widely interpreted by federal agencies to mean the pass-through entity should use the risk assessment to determine the appropriate level of monitoring needed for the sub-recipient throughout the grant period of performance.
Grant Recipient Beware
It’s clear that the Federal agencies vary widely in their interpretation of the new risk assessment requirements.
When you are considering applying for additional Federal awards, make sure you look at the guidelines for your specific funding agency or you may be surprised when they view things differently.
But regardless of the specifics, well-trained program staff, strong internal controls, and successful performance of the award objectives will give you the edge for future funding.
It’s a fact that great grant management never goes out of style!
Would you like to know more about grant management?
If it’s been a while since you looked at the grant regulations, our monthly grant management training seminars make it simple to get the grant management training you need…and get it completed quickly.
You’ll also have opportunities to network with other grant professionals and gain from other’s real-life experiences.
We’ve customized the program for the unique needs of State, Local and Tribal Governments, Nonprofit Organizations and Institutions of Higher Education.
Click here to get more details.
Lucy Morgan CPA, MBA
CEO, Compliance Warrior