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.)

Let’s walk through the Decoding Grant Management 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 pertinent to the award, such as program documentation and other compliance records. Here are some of the types of records to maintain:

Financial Records

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

Procurement Records

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

Cost-Sharing Documentation

Regarding cost-sharing or matching records, the federal recipient must maintain documentation supporting the determination of the cost-share valuation.

When it comes to cost-sharing or matching records, the federal recipient must maintain documentation supporting the determination of the cost-share valuation.

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 includes a unique identifier, such as a serial number
• The cost and source of the property; for example, the contractor name, if the property was 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

Other Records

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 screenshots 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.

The general rule for record retention is that records must be retained for three years from the submission date of the final expenditure report. If the federal awarding Decoding Grant Management agency authorizes and the federal recipient submits quarterly or annual reports, the three-year time frame will start from the submission date of the yearly or quarterly expenditure report.

The three-year record retention rule has some important exceptions

Property Records

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.

For plans submitted for negotiation, the records must be retained for three years from the submission date.

If the indirect-cost rate proposal or allocation plan was not submitted for negotiation, the records must be kept 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.

Program Income

When program income is earned after the end of the 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 promptly and reasonably.

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, suppose a company does not dispose of records after the three-year retention requirements have expired. In that case, the federal funding agency can request all records related to the federal award, regardless of the age of the records.

Key Concepts

• 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 to personnel and records.

Ready to Improve Your Grant Management?

How about you? Would you like to be a better grant manager? We have another grant management training seminar coming soon. Click here to get all the details! Hope to see you there! Author: Lucy Morgan CPA, MBA CEO, Compliance Warrior Author of “Decoding Grant Management-The Ultimate Success Guide to the Federal Grant Regulations in 2 CFR Part 200” The 2nd Edition is now available on Amazon in Paperback and Kindle versions.