This is the fourth section in our five part series on “Grant Management 101.”

“WHEN THE IMAGES BECOME INADEQUATE, I WILL BE CONTENT WITH SILENCE” – ANSEL ADAMS

Are you content with inadequate images? How about inadequate documentation? Do you think “being content with silence” will be an effective strategy when you get costs disallowed on your Federal Grant? Seriously, adequate documentation is the subject that Grant recipients love to hate. How do you stay compliant without going crazy?

We know that Grant recipients are required to maintain adequate documentation. But what exactly does that mean?

Grant Management 101: Adequate Documentation

Adequate documentation is the foundation used to support accounting and cost records. The documentation should provide the means to verify proper segregation of spending between various Federal Awards and non-Federal expenditures. This point is central to making sure funds are obligated and spent as they were intended by the Federal Award.

The extent of the documentation required is affected by the size and complexity of the Organization or Governmental unit, and the existing control mechanisms. The type of the documentation needed may also vary depending on the relationship between the activities and specific internal controls.

“We can lick gravity, but sometimes the paperwork is overwhelming” – Wernher Von Braun

Let’s look at four areas of documentation with some examples of adequate source documentation to break it down a bit. We will look at:

1. 1) Authorization
2. 2) Time-tracking
3. 3) Spending
4. 4) Reporting

We’ll start with authorization.

How to document authorization adequately?

Purchases should be properly authorized in accordance with internal policies and procurement standards.

Some examples of adequate source documentation might include:

• A purchase request or requisition that is signed by the manager with direct budgetary responsibility for the project or program being charged for the purchase.

Without prior authorization documented in the purchasing records, the Organization may not be able to demonstrate the purchase was properly authorized before the purchase was made.

Therefore, purchasing documentation without evidence of proper authorization may be considered insufficient source documentation and risk the purchase being disallowed for charging the Federal Award.

How to document time-tracking adequately?

Time tracking is another area of documentation that gets a lot of Federal scrutiny. An example of adequate source documentation for time keeping would include timecards or other labor reporting completed in a timely manner. A timecard should have sufficient detail to determine:

• 1) What Award was worked on?
• 2) When the work was done?
• 3) Who worked on the Award?
• 4) When the time was reported?

Now let’s look at some examples of adequate source documentation for spending so you know what is required.

How to document spending adequately?

First of all, adequate source documentation for spending includes having receipts with sufficient detail to be able to determine:

• 1) What the funds were spent on?
• 2) When did the spending occur?
• 3) Who made the purchase?

Receipts that don’t provide enough detail to determine what was purchased would not be considered adequate source documentation.

Example:

An example of inadequate documentation would be the credit card receipt listing the total amount of purchase, but not what was purchased.

This is because a credit card receipt that only lists the total amount does not provide sufficient detail to determine what was purchased. Without the detail of the purchases, the Recipient can’t ensure that the purchases were Allowable for charging to a Federal Award.

How to document reporting review and monitoring adequately?

When it comes to adequate source documentation for reporting, this generally involves review of related documentation and approval by an appropriate manager. An example could be reports that are supported by financial records and reviewed (and signed) by a suitable level of management.

The Administrative Requirements indicate that reporting is not limited to just financial records. Adequate program documentation could include having a detailed narrative explaining the objectives of the project or program, and how program activities are supporting those objectives.

It’s not done until the paperwork is done.

As you can see, there are many ways to ensure that Federal funds are spent as required by Award and other regulations. Generally adequate source documentation includes the following elements:

• 1) Who spent the funds and who authorized the spending?
• 2) What were the funds spent on?
• 3) Where, that is, what Award should be charged for the spending?
• 4) When the spending was authorized and when was it spent?

P.S. Here’s even more free information.

Check out the Adequate Documentation Video Lesson.

Length: Approx. 4 minutes

Don’t miss your own really cool, one page “Quick Reference Guide: Adequate Documentation.”

(Just click on the link to download.)

This is the fourth section in our five part series on “Grant Management 101.”

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