Are you facing the “Goldilocks Dilemma” of record retention? Is your record retention too much? Not enough? Or just right?
Wondering which records to keep for your federal grant record-retention requirements and which ones can be tossed?
(Inadequate supporting documentation is an area that gets many federal grant recipients into trouble.)
Lets walk through the basics of record retention for your federal grant under the Uniform Guidance:
Types of Records to Retain
The record-retention process continues throughout the grant management lifecycle culminating during the grant close-out process. It includes a variety of record types including:
- Financial records
- Procurement records
- Cost-sharing documentation
- Real property and equipment records
- Indirect cost rate proposals and cost allocation plans
- Other types of records such as suspension and debarment compliance documentation
Each federal grant recipient must retain all other records that may be pertinent to the award, such as program documentation and other compliance records.
Here are some of the types of records to retain:
Financial records should include the source documentation that supports the financial and accounting records. Some examples of these records include:
- Copies of paid bills
- Bank statements and images of cancelled checks
- Support for payroll and time and attendance records
- Copies of contracts and subgrant or subaward documents
- Copies of prior-authorization approval documents, as required
Next, the procurement history files should contain supporting records such as:
- The procurement method rationale
- Backup for the contract type selection and basis for the contractor selection or rejection
- The basis for the contract price, which would generally include a price or cost analysis
- Evidence of prior approval for those items that required prior approval on the procurement
When it comes to cost-sharing or matching records, the federal recipient is required to maintain documentation that supports the determination of the cost-share valuation. This could include formal appraisals when required or other supporting records such as a comparison of market values for donated labor or property.
Real Property and Equipment Records
Moving on to real property and equipment records, the federal recipient should be aware that there are extensive record-keeping requirements. Property records should contain the following data:
- A description of the property that contains a unique identifier such as a serial number
- The cost and source of the property; for example, the contractor name if purchased
- Whether title is held by the federal government or the federal recipient
- The date the property was acquired and the percentage of federal participation in the acquisition cost
The federal recipient may also have continuing documentation requirements for real property and equipment, such as tracking the following items:
- The current location of the property
- The current use and condition
If the property is not in use, also include:
- The disposition instructions
- The date of disposal
- The sales price received from the disposal, if applicable
Indirect-Cost Rate Proposals
Next, there are a variety of indirect-cost records to retain including all rate proposals without regard to whether they were submitted for negotiation.
The supporting documentation could contain:
- Indirect-cost rate proposals
- Cost-allocation plans
- Accounting computations
- Other documents that support the rate computations, such as computer usage charge-back rates and the composition of fringe-benefit or facility rates
Finally, the federal recipient is required to retain other records that are pertinent to the federal award, such as:
- Evidence of subrecipient monitoring
- Evidence of suspension and debarment compliance, such as screen shots of an excluded-parties list system search
- Program records that support program accomplishments and reporting
- Evidence of contract provisions compliance for the federal recipient and (if applicable) the subrecipients and contractors. An example of contract provisions compliance is documentation for Davis-Bacon Act requirements.
Please note that these sample record types are not meant to be an all-inclusive list of what records the federal recipient must retain, but are a selection of the major categories.
Time Frame for Record Retention
The general rule for record retention is that records must be retained for three years from the date of submission of the final expenditure report. If the federal awarding agency authorizes and the federal recipient submits quarterly or annual reports, the three-year time frame will start from the date of submission of the annual or quarterly expenditure report.
The three-year record retention rule has some important exceptions:
Real property and equipment records must be retained for three years from the date of final disposition of the property. Depending on the use of the property, this could be considerably longer than three years from the date of award completion.
Litigation and Other Claims
Litigation cases, claims or audits started before the three-year period expires extend the retention period. In these cases, the federal award recipient must retain records until all actions have been resolved and final action related to the litigation, claims, or audits has been taken.
Indirect Cost Allocations
For indirect-cost rate proposals, allocation plans, and other related records the three year retention period starts on a different date than the general rule. In the case of plans submitted for negotiation, the records must be retained for three years from the date of submission. If the indirect-cost rate proposal or allocation plan was not submitted for negotiation, the records must be retained for three years from the end of the covered fiscal year.
Requests for Extended Retention
The federal awarding agency or other agency that approves the indirect cost rates (called the cognizant agency) can submit a written request to the federal award recipient to extend the three-year retention period.
When program income is earned after end of performance period, the terms and conditions of the grant may require reporting of program income earned after the performance period ends. In this case, the retention period for these records begins at the end of the federal award recipient’s fiscal year during which the program income was earned.
Right of Access to Records and Personnel
The federal government and its duly authorized representatives have a right to access federal recipient records in a timely and reasonable manner. The records must be pertinent to the award in question. This right to access by the federal government includes:
- The right to timely and reasonable access to the federal award recipient’s personnel
- The right to interview and discuss documents that are pertinent to the award with the Federal recipient’s personnel
Note that the federal government’s right to access records extends as long as records are retained and without limit to the three-year retention period requirements. For example, if a company does not dispose of records after the three-year retention requirements have expired, the federal funding agency can request all records related to the federal award, regardless of the age of the records.
- Federal recipient records related to federal awards as a general rule must be maintained for three years following the final report to the federal funding agency, with some exceptions.
- The federal government retains the right to timely and unrestricted access.
Want More Grant Management Tips?
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Author: Lucy M. Morgan, CPA, MBA GPA Approved Trainer