When managing federal grants, you must understand the requirements for a successful Single Audit.
After all, the goal of the Uniform Guidance regulations is to make sure that money spent on Federal grants is only for: • Allowable activities • Allowable goods and services But three little-considered factors also affect your Single Audit. They are:- Ethics
- Insight
- Communication
#1: The Ethical Environment-5 Things Auditors Look For
Ethics involves more than just signing a Code of Conduct form once a year. Auditors look at the overall control environment of the organization by asking questions about the ethical climate. Here are five questions that you may hear during your Single Audit:- Are there incentives for employees to mischarge spending between federal and non-federal programs?
- Do managers investigate and enforce consequences when grant funds are misused?
- Is there an overall awareness of the importance of keeping federal spending separate from non-federal spending?
- Does a list of allowable and unallowable costs and activities exist for personnel working on the federal award?
- Is there an approval process for spending?
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- Want to read more about the consequences of poor grant management? Check out my article https://blog.myfedtrainer.com/federal-audit-finds-sheriffs-organization-misspent-more-than-704000-in-award-funds/
#2: Management Insight-Can You Identify the Holes?
Management plays a crucial role in enabling a successful Single Audit by providing insight into the potential problem areas where bad things could happen. Some questions that you may hear from auditors include:- Do managers clearly understand their staff, processes, and controls to identify where unallowable costs could “slip through” and get charged to a federal grant without being detected?
- Do managers receive training or onboarding about their role in monitoring program spending to reduce the risk of Single Audit findings?
- Do managers feel empowered to implement corrective action plans when staff, processes, or controls are inadequate?
Good grant management involves exchanging ideas and information, so communication is our third little-known factor in successful Single Audits.
#3: Communication-What is the Process?
Communication is more than a soft skill; it is a component of strong internal controls. And good communication involves many aspects of excellent grant management. For example:- How is the concept of allowable costs vs. unallowable costs communicated to staff?
- Are reports, with information like budget vs. actual spending, shared and reviewed by the appropriate management level on a timely basis?
- Are there established communication channels both within the organization and outside, such as program officers and board members?
- The supporting documentation for spending is compared to a list of allowable and unallowable costs.
- Spending is reviewed to ensure an individual knowledgeable about the allowable activities and the allowable types of costs is the one who authorizes the expenditures.
- Calculations are checked for accuracy.
- Responsibility for activities and spending on federal vs. non-federal projects are clearly separated.
- Adequate segregation of duties exists between authorizing and reviewing federal spending.
- Unallowable costs are detected, and there is a follow-up to determine the cause when appropriate.
Whether you’re spending dollars or time on a federal grant, the expenditures must be allowable to charge the federal government.
The Single Audit looks at both the activities you spend time on and the purchased goods and services. And viewing those activities through the lens of ethical behavior, management insights into problem areas, and strengthened communication will go a long way toward a smooth Single Audit.