Staying compliant with federal grant requirements demands more than just good intentions. Strong internal controls and proactive monitoring are essential. Use this grant compliance checklist to review 10 critical areas where organizations are most vulnerable to risk. Strengthening these systems protects your funding, maintains trust with funders, and ensures compliance with the Uniform Guidance.

How to Use This Grant Compliance Checklist

Regularly review your internal controls against this checklist to catch problems early—and stay ahead of compliance risks.

1. Build a Culture of Ethical Leadership

Unethical leadership is one of the first warning signs of deeper compliance issues.
Check for:

• Clear policies and procedures 
• Defined lines of authority 
• Separation of duties 
• Individual accountability 
• Fraud reporting mechanisms
  

2. Recognize and Correct Risky Financial Behaviors

High-risk financial behaviors create opportunities for fraud.
Check for:

• Accurate preparation of financial statements 
• Oversight of budget-to-performance comparisons 
• Strong HR oversight in hiring, salaries, and bonuses 
• Consistent personnel evaluations

3. Strengthen IT Security to Protect Grant Data

Weak IT security can expose sensitive grant data to risk.
Check for:

• Access restrictions on systems 
• Formal data backup and recovery plans 
• Record retention policies for electronic records
  

4. Protect Organizational Assets with Strong Internal Controls

Physical and financial assets must be safeguarded to prevent loss.
Check for:

• Physical security for facilities, records, and equipment 
• Regular audits comparing actual assets to records 
• Monitoring of asset movement

5. Tighten Accounting Controls for Grant Compliance

Effective accounting controls are crucial for accurate grant management.
Check for:

• Separation of duties 
• Monitoring for duplicate vendors or payments 
• Timely and complete financial reporting 
• Review of journal entries and account reconciliations

6. Improve Grant Monitoring and Performance Tracking

Without strong project oversight, grant funds can be mismanaged.
Check for:

• Staffing adequacy for project requirements 
• Clear performance reporting 
• Timely project updates 
• Tracking results and outcomes

7. Implement Strong Cash Handling Procedures

Cash mishandling can quickly lead to fraud.
Check for:

• Controls for cost-share or matching accounts 
• Clear separation of nonprofit and for-profit transactions 
• Oversight of cash deposits and wire transfers

8. Maintain Strong Grant Oversight and Internal Monitoring

Monitoring activities reveal discrepancies before they escalate.
Check for:

• Thorough review of complex or unusual transactions 
• Oversight of expense reports and credit card use 
• Budget-to-actual cost comparisons 
• Documentation of expense reallocations
  

9. Manage Conflicts of Interest Transparently

Conflicts of interest must be disclosed and managed properly.
Check for:

• Disclosure of outside business interests 
• Oversight of board relationships 
• Clear reporting paths for conflicts 
• Whistleblower protections
  

10. Strengthen Staffing and Payroll Oversight

Weak payroll systems can create vulnerabilities.
Check for:

• Reliable payroll systems 
• Monitoring payroll discrepancies 
• Clear contracts with consultants and subcontractors 
• Stability and retention of staff
  

Why a Federal Grant Compliance Checklist Is Essential

A federal grant compliance checklist helps organizations stay aligned with funder expectations, reduce the risk of costly audit findings, and maintain eligibility for future funding opportunities. Using a structured grant compliance checklist ensures you regularly review critical areas like internal controls, financial management, and conflict of interest policies.

Without a checklist, it’s easy for important compliance tasks to fall through the cracks—especially in busy grant cycles. Proactively using a federal grant compliance checklist strengthens your organization’s accountability and shows funders you are committed to responsible stewardship of grant funds.

Strengthen Your Grant Compliance Before Problems Arise

While these 10 risks do not automatically indicate fraud, they should trigger careful review. Treat this grant compliance checklist like an “early warning system” to spot potential vulnerabilities before they threaten your organization’s funding and reputation.

Need to refresh your compliance knowledge? Join one of our upcoming federal grant compliance training sessions or webinars to stay ahead of evolving requirements.