This is the sixth section in our thirteen part series on “The Busy Person’s Guide to Grant Management.”
DO YOU HAVE TO KEEP YOUR GRANT FUNDS IN A SEPARATE BANK ACCOUNT? MAYBE NOT—IF YOU KNOW WHAT ELSE IS REQUIRED.
It’s official. You are getting money to pay for your Grant. Things are starting to happen. Maybe many things are happening. Multiple Awards, lots of program work, hiring people, and work is getting busy! The last thing you may be thinking of is separate bank accounts.
The good news is that Federal Agencies may not require Grant recipients to keep separate bank accounts for Federal funds unless specified in a Federal-State agreement. Seem too good to be true? If could be if you don’t track the money in a certain way.
The Busy Person’s Guide to Separation of Grant Funds
When using a bank account that has Federal funds from different Awards all co-mingling together, the recipients must be able to account for the receipt, obligation and expenditures of Federal funds in the account.
This means that even though all the various Federal funds come into one account, the Grant recipient must be able to report on the use of the funds “as-if” the accounts were separate.
What do I have to track?
You must track:
- 1) Receipts
- 2) Obligations
- 3) Expenditures
Let’s take a deeper look at the information that must be tracked by the individual Federal Award when using a co-mingled bank account.
Receipts = Money coming in to us
Since Federal funds can be requested and received by the Grant recipient without identifying the specific Award number, this requirement can be overlooked.
This requirement means that even though the funds come in as one lump sum of money, the Grant recipient must have a process to allocate the funds receipt and report on that allocation by the individual Federal Award number.
Obligations = Money we have to pay someone else
The Grant recipient must also have the ability to report obligations by the individual Award number. Obligations are for contracts and Grants and represent the services received and similar transactions which occur during a specific period and require payment from the Grantee to settle the obligation.
Expenditures = Money we paid to someone else
That brings us to expenditures. Expenditures are also called outlays. Many people think of expenditures as Award spending, and that is a close description. Expenditures consist of charges made to the project or program.
Expenditures may be reported on either a cash basis or an accrual basis. The difference between a cash basis and an accrual basis may create a “timing” difference between when the money is shown as an expense to the program and when it is actually paid out of the bank account.
Similar to receipts and obligations, the Grant recipient must be able to report the expenditures by specific Awards to be able to use a co-mingled bank account for Federal funds.
How do I find out more?
The Administrative Requirements for your type of Organization includes sections on Cash Management for Grant recipients. It is a good reference if you have more questions on Grant Management topics. Here are the regulations for your type of Organization:
- State, Local and federally recognized Indian Tribal Governments, should reference OMB Circular A-102, and the Grants Management Common Rule.
- (Individual Federal Agencies and departments codify the Grants Management Common Rule requirements with their own set of regulations contained in various “CFR” citation numbers)
- Both Non-profit organizations and Institutions of Higher Learning should use regulation 2CFR Part 215. These regulations used to be contained in “OMB” Circular A-110.
Copies of the regulations can be found at: http://www.whitehouse.gov/omb/circulars_default
P.S. Here’s even more free information.
Check out the Separation of Grant Funds Video Lesson.
Length: Approx. 3 minutes
Get your own very cool, one page “Quick Reference Guide: Separation of Grant Funds.”
(Just click on the link to download the .pdf file.)
This is the sixth section in our thirteen part series on “The Busy Person’s Guide to Grant Management.”
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