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

The “Goldilocks” Dilemma of Record Retention: Is Your Record Retention “Just Right?”

How do you know which records to keep for your Federal Grant record retention requirements? Do you find yourself wondering which documents need to be kept or tossed? Do you know how long you need to keep the records? This is an area that gets many Federal Grant recipients into trouble.

Let’s start off your Grants Management by looking at the record retention requirements for Federal Grant recipients.

Grant Management 101: Record Retention

There are a number of different types of records which are covered under the Grant Administrative requirements and must be retained and available to the Federal government.

What are the main types of records to retain?

The main types of records include:

• Financial records
• Procurement records
• Real property and equipment records
• Other types of records, such as Indirect Cost rate proposals and program reports

Let’s explore each of these types of records in more detail.

Five types of financial records you should keep.

Financial records should include the source documentation that supports the financial and accounting records. Five examples of financial records that you should be keeping include:

1. Example #1: Copies of paid bills
2. Example #2: Bank statements copies of cancelled checks
3. Example #3: Support for payrolls and time and attendance records
4. Example #4: Copies of contracts and “Subgrant” documents
5. Example #5: Copies of “prior authorization” approval documents as required

Warning: These records get lots of auditor scrutiny. Do you know what needs to be in the files?

Records for procurement of goods and services get a lot of scrutiny from auditors. There are a number of different documents that should be contained in the procurement records. The main examples of supporting records in these files would be:

• 1) The procurement method rationale
• 2) Backup for the contract type selection and basis for the contractor selection or rejection
• 3) The basis for the contract price which would generally include a price or cost analysis
• 4) If prior approval was required on any procurement, the prior approval evidence should be included in the procurement file

Do you make this mistake with your property records?

Many a Grant recipient has that mistaken belief that property purchased with Federal funds is just like “any other” purchase. In actuality, when it comes to “real property” and equipment records, there are extensive record-keeping requirements.

Not only are there more items to track, the tracking needs to happen for potentially a much, much longer period of time. Let’s start with what items have to be tracked:

Property records should contain the following data:

• 1) A description of the property which contains a unique identifier such as a serial number
• 2) The cost and source of the property, for example, the vendor name if purchased
• 3) Who holds the title, in other words, who owns the property: the Federal Government or the Grantee?
• 4) The date the property was acquired and the percentage of Federal participation in the acquisition cost

The Grantee 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

And if the property is not in use:

• The disposition instructions
• The date of disposal
• The sales price received from the disposal, if applicable

The rest of the story…

Finally, the Grant recipient is required to retain other records which are pertinent to the Federal Awards. Think of record retention as the story that explains where the Federal funds went when no one is there to remember.

Records that demonstrate efforts at compliance, monitoring, and program achievements are all items that need to documented and retained for future reference.

Here are six other common types of records that you need to retain:

1. #1 Evidence of Subrecipient monitoring, such as copies of various A-133 Audit reports
2. #2 Evidence of suspension and debarment compliance, such as screen shots of an “excluded parties’ list system” search
3. #3 Various program records that support program accomplishments and reporting
4. #4 Evidence of contract provisions compliance for both the Grantee and (if applicable,) the Subgrantees and contractors
5. #5 Indirect Cost rate proposals and cost allocation plans
6. #6 All other records that may be pertinent to the Award, such as cost-share documentation and other compliance records

How long do I have to keep all these records?

Generally, the Federal Grant recipient is required to retain these records for three years from the date of submission of the final expenditure report. This is the “general” rule for record retention.

If the Agency authorizes and the Recipient submits quarterly or annual reports, the three-year timeframe will start from the date of submission of the annual or quarterly expenditure report.

Now let’s look at a couple of exceptions to the “general” rule.

How can you be so right and yet so wrong?

Just last week, I read a great quote by a State of Colorado representative that maintained they weren’t required to keep property records past three years after the Federal Grant was wrapped up. While technically correct, they missed a whole section of the record retention requirements regarding property records

This brings us to the first exception to the three-year record retention “general” rule which concerns records for real property and equipment.

For 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.

Moreover, there are ongoing tracking requirements for property that must be maintained for the life of the equipment purchased with Federal funds.

Here come da judge…

The next exception to the three-year “general” rule is in cases of litigation, claims or audits started before the three year period expires.

In these cases, the Recipient must retain records until all actions have been resolved and final action related to the litigation, claims, or audits has been taken.

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

Check out the Record Retention Video Lesson.

Length: Approx. 5 minutes

Get your very own really cool one page “Quick Reference Guide: Record Retention.”

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

 

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

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