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

HOW TO MAKE SURE YOUR FINANCIAL CONTROLS ARE DOING THEIR JOB

OK, you’ve reviewed policies and procedures until you are blue in the face. Think you have all the financial controls covered with regards to your Federal Award? Wait a minute, how are you sure the controls are “effective”?

Webster’s dictionary defines “effective” as “producing a desired effect.” Now is where you have to determine if all this “stuff” to watch over your Federal Grant is really working.

Grant Management 101: Effective Controls

The control requirements for Financial Management Systems state that Federal Award Recipients must demonstrate effective control and accountability for all cash, property and other assets.

Adequate Safeguards for Assets

Effective control and accountability starts with adequate safeguards over all assets.

Preventative controls to limit risk of asset loss should be in place.

• These measures may include physical measures such as a locked storeroom for equipment and supplies.
• It could also include preventive measures such as adequate segregation of duties.

Effective controls should provide assurance that assets are used solely for the authorized purposes. This means assets purchased for a specific project or program would be used solely as authorized by that Award.

There are many components of an effective control and accountability system for safeguarding assets.

Five examples of safeguarding assets:

There are many components of an effective control and accountability system for safeguarding assets. Here are five examples of ways to safeguard assets:

1. 1) A control system that would detect when assets were missing
2. 2) The related accountability to investigate immediately any assets that were reported missing
3. 3) Maintaining reliable accounting records for fixed assets and inventories
4. 4) Matching property records to financial records and supporting documentation
5. 5) Periodic physical inventory of the assets

Three pillars of effective controls:

The control requirements cover a wide range of activities, but there are three areas that are pillars of effective controls. Those areas are:

1. 1) Written policies and procedures
2. 2) A process for ensuring that employees are adequately trained to perform their responsibilities
3. 3) Effective monitoring to see if internal controls are working as expected

Let’s look at some of these in further detail.

Pillar # 1: Four examples of written policies and procedures:

Some examples of written policies and procedures that help demonstrate effective control and accountability are:

1. Example #1: Procedures that spell out the planning and budgeting process
2. Example #2: A written policy giving specific authority for spending
3. Example #3: Written job descriptions illustrating personnel roles and job responsibilities
4. Example #4: Policies and procedures on the timekeeping and labor documentation requirements

Pillar #2: Training, it’s not just for your first day anymore.

Next, effective control and accountability includes making sure that employees have adequate training to perform their job duties. This means designing a program of training for both new employees and periodic training for existing employees that is appropriate for their specific roles and responsibilities.

Watch out: One area of high scrutiny is the training programs for ensuring employees understand the importance of proper time and labor charging on Federal Grants.

Pillar # 3 Warning: You also have to monitor controls.

Monitoring is an important component of effective control and accountability. It’s not enough to just put a bunch of procedures and policies in place. Award Recipients should demonstrate to their funding Agency that they have ongoing monitoring procedures in place.

The goal of monitoring is to test the effectiveness of existing processes and procedures.

This means that reviews should be conducted periodically to test if the Organization’s internal controls are working as expected.

Some examples of monitoring may include:

• Example #1: An annual review and update of policies and procedures documents
• Example #2: Regular reconciliations of financial accounts including explanations supporting any adjustments to those accounts
• Example #3: Reviews to ensure employees are knowledgeable about, and comply with, existing policies and procedures

“The only thing constant in this world is change.” – India Arie

Finally, effective control and accountability recognizes that situations can change. Therefore, a component of good internal controls is to have an appropriate process for modifying processes and procedures as required by changes in conditions.

This may include an annual review of existing documentation, and defining a process to follow during “emergency” situations.

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

Check out the Effective Controls Video Lesson.

Length: Approx. 4 minutes

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

(Just click on the link to download the .pdf file.)

P.S.S. Great job! You completed the series!

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

Want to find out even more?

For a limited time you can get our FREE 13 part series: “THE BUSY PERSON’S GUIDE TO GRANT MANAGEMENT.”

This series covers 13 different topics that are common findings on A-133 Audits, such as Allowable costs, cash management, and suspension and debarment.

Get started now:

We do not share your information with others. That’s the bottom line.

Privacy Policy: http://www.myfedtrainer.com/privacy/