Do you wish you had a crystal ball of what Federal auditors look for when they arrive to make sure your grant management is up to par?
What Are They Looking For?
If you knew what the primary focus areas were, could you concentrate your compliance efforts at your organization?
Sure this doesn’t cover everything, but do you get the big things right?
We analyzed the recent shocking audit results at BBBS to determine what are the major areas of concern by the auditors.
Here are 7 secrets that you should know when the auditors arrive to look at your grant spending:
Secret #1 Good Works Don’t Buy You a Pass
It doesn’t matter how many testimonials you have, and how long your history of doing good works.
If you don’t comply with the requirements, there is not a “get out of jail free” card.
Even nice people have to comply with the Administrative Requirements and Cost Principles.
Secret #2 You Still Need To Deliver
The pickiest compliance plan in the world still requires real-life results.
You can have the best internal control environment, but at the end of the day you still need to complete the objectives of the program.
That’s why auditors look at the reports for program performance and accomplishments.
It’s not enough to spend the federal funds perfectly, you need to stand and deliver as well.
Secret #3 You Have to Ask Hard Questions
Monitoring is an important part of any grant and it can’t be left to just one or two Finance-types.
• Are you asking the hard questions about the use of federal funds?
• Are our subrecipients providing sufficient backup for their spending?
• What happened to those laptops that were sitting around in the back room?
• Do we really need to pay those consultants so much?
It takes a “village” to stop the waste, fraud and abuse of taxpayer dollars.
Don’t leave it for the “other” guy.
Secret #4 Loosey Goosey Won’t Cut It
It seems so great.
All this work to win your grant and now…you get to spend OPM (aka “other people’s money“)
Full steam ahead to meet the program objectives…
Wait a minute…what’s missing?
When programs get into trouble there is almost always a break down in the internal control environment.
Simply put, grant expenditures, including personnel, fringe benefits, travel expenditures, consultant payments and other types or spending are happening fast and furiously-and no one is taking time for the “paperwork.”
Stop, take a deep breath and then make sure:
• The spending is for allowable costs ONLY
• The spending is authorized by the right people ahead of time
• The spending is being sufficiently documented
Secret #5 When You Take the Money Matters
Hey, life is good!
Whenever you want money, you just draw funds and they appear in your bank account a couple days later.
• What a relief to not have to worry about insufficient funds ever again!
But then there’s that inconvenient truth: You can’t draw more money than you need for your immediate cash needs.
• This is one of the first things auditors look for when they start digging through your records.
Lots of groups get in trouble with this one, so watch out.
Make sure you can prove you don’t have excess grant funds sitting around in your organization’s bank account.
• The money should come in and turn right around to pay for allowable costs for that specific grant.
It’s not there to cover other needs.
Secret #5 Get Stuck on Budgets
It may not seem like it, after watching the budget battles on Capitol Hill, but Federal Agencies really do expect grant recipients to stick to the program budget.
If things happen to change the program needs, have that conversation with your Program Officer.
Don’t put your head in the sand and say “la, la, la, la”
Even worse, don’t start spending the budget on a bunch of things that were never contemplated in the grant proposal just because you have a little “extra money.”
Reporting your spending against the program budget is a requirement for receiving federal funds.
Don’t plead ignorance.
A mindless “use it or lose it” spending plan will get you in trouble every time.
Secret #6 Be the Adult
Sometimes you just have to put on the big-boy pants and insist that the regulations are followed.
We all hate to chase people down for receipts and approvals.
Physical inventories are not anyone’s favorite weekend activity.
But that is part of responsible grant administration.
Be the adult and require the rules that bring the grant funds flowing be followed.
It’s better to do it now than experience the consequences of grant funds being frozen, or disallowed.
Secret #7 Don’t Assume People Know the Right Thing to Do
Training is often a requirement for corrective action plans-after you screw up.
How about offering training in the beginning, middle and end so people will actually know what is expected of them?
The organizations that stay out of trouble know that training is part of good grants management and will keep them out of trouble in the long term.
How about you?
Have you survived an audit by your federal agency and lived to tell about it?
- Did you have gold stars or battle wounds?
- What did you learn from the process?
We’re putting together a “lessons learned” white paper.
Please include your comments so we can pick the best tips.
Lucy Morgan CPA, MBA
CEO, Compliance Warrior
P.S. If you’d like to find out more about how to avoid grant management problems and pitfalls?
Check out Grant Management Boot Camp training that helps that helps people work through these issues.
Click the link below for your type of organization to get more information about our courses and to get signed up.