In our last article we looked at 3 tips to get seen as the best choice for receiving grant funding in the new environment of the OMB 2 CFR Part 200 also known as the OMB “Super Circular.”
Now let’s move forward and get into the “hearts and minds” of the Federal agencies by discovering how to be seen as the SAFE solution for awarding Federal dollars.
In other words, how can you avoid the top five mistakes that red-flag your organization to Federal agencies?
What Are The Common Mistakes?
I didn’t even have to do a bunch of heavy research to identify these mistakes. They are so common that the federal government, through the federal audit clearinghouse has assigned each of them a code.
(I’ve grouped them into a simpler format, to make them easier to understand.)
The top five mistakes are:
• Spending mistakes
• Monitoring mistakes
• Timing mistakes
• Tracking mistakes
• Procedural mistakes
Mistake #1: Spending Mistakes
The first mistake has to do with spending.
Unallowable Activities
One of the places this mistake shows up is when people are spending their time on activities that are unallowable.
That can have a couple of causes:
1) They don’t realize that each award needs to have the time tracked separately and that it’s not just a “big old bucket” of federal dollars.
2) There can be “scope creep” where you’re doing things that really weren’t called for in the original award, but you’re still charging the award.
Then there’s another form of spending mistake.
Unallowable Costs
It surfaces in the area most of us think about: Money gets spent and the costs are unallowable.
Now we all know the common ones; “Don’t go out and buy a keg of beer with Federal dollars.”
But while the unallowability of alcoholic beverages is pretty well-known, there are other types of costs that aren’t as well known.
For example, if you have an employee who was relocated with Federal dollars covering part of the costs, you may be in trouble if the employee decides to move back or leave the organization a few months later.
When this happens, the organization has to repay the unallowable costs because the person didn’t stay there for a full 12 months after the relocation. An expensive thing to overlook!
Mistake #2 Monitoring Mistakes
The second common type of mistake is a form of monitoring mistake.
This can take several forms including external, internal and time and labor monitoring.
External Monitoring
First, external monitoring includes things like subrecipient monitoring.
Overlooking your responsibilities for this can be note-worthy type of mistake-as in you may read your name in the paper.
I’ve cited some well-known examples before.
Here are a few:
The Shocking Truth about $2.3 Million Payback of Grant Funds
$7 Million Repayment Blues: City Readies Payback for Lack of Grant Management
When It Comes to Grant Spending-Who’s Watching the Store?
External monitoring is not limited to monitoring your subrecipients, it also includes monitoring certain aspects of contractor relationships as well.
Internal Monitoring
Another type of monitoring is internal monitoring.
With the new grant guidance there has been a new focus put on internal controls-which include monitoring to make sure they are working as expected. .
In the past, the framework of internal controls was primarily discussed in the A-133 Audit Guidance.
Now internal controls are woven throughout the guidance in the new Super Circular.
This shift has moved it from being just a finance and audit focus into something that everyone working on Federal awards needs to be aware of and monitoring.
Time and Labor Monitoring
Then there’s time and labor monitoring.
This monitoring requires that people fill out their time and labor reporting accurately.
But it doesn’t stop there.
There is a requirement that the person monitoring time and labor charging must have knowledge of whether or not the person reporting the time is working on the award as stated.
Again the bar is being raised with the heightened focus on reducing waste, fraud and abuse.
Eligibility Monitoring
Finally there’s eligibility monitoring.
This again has to do with making sure that the terms and conditions of the award are being met.
How do you make sure that you only serve people who are eligible to receive services or benefits from the award?
Sometimes in the rush to spend that money quickly and serve a lot of people, this can be overlooked Grant Manager Should Know.
But the fact is: People working on Federal awards need to know what the terms and conditions say and what eligibility restrictions may be in place Grant Manager Should Know.
In our next article, we’ll finish up with Part II and look at common timing, tracking and procedural mistakes.
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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.