Has your organization received any public or private grants to fund its growth? Grants sometimes require an independent audit by a qualified accounting firm. Here’s what grant recipients should know to help facilitate matters and ensure compliance at all levels.
Federal awards require compliance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (also known as 2 CFR Part 200). This guidance requires any entity that expends $750,000 or more of federal assistance received for its operations to undergo a “single audit,” which is a rigorous, organizationwide examination.
To provide grant recipients with the latest guidance on compliance, the Office of Management and Budget (OMB) releases an annual compliance supplement. It covers compliance requirements for a dozen areas when performing a single audit:
- Activities allowed or unallowed,
- Allowable costs/cost principles,
- Cash management,
- Equipment and real property management,
- Matching, level of effort and earmarking,
- Period of performance,
- Procurement, suspension and debarment,
- Program income,
- Subrecipient monitoring, and
- Special tests and provisions.
The supplement also includes sections dedicated to agency program requirements, including clusters of programs that share common compliance requirements.
Your auditor will assess whether your organization has sufficient internal controls in each of the 12 areas. To help ensure compliance, your organization should clearly document decisions and processes, as well as provide a clear audit trail of activity.
Other levels of compliance
The requirements for state, local and private sector grants vary significantly. But compliance generally hinges on the following, regardless of the source providing the funding:
- A detailed understanding of the grant’s compliance and reporting requirements,
- A mapping of requirements to individual controls and processes,
- A documented set of grant management policies and procedures that your organization publicizes and follows,
- A robust set of internal controls and mechanisms to prevent fraud, waste, and abuse,
- Training programs designed to promote grant compliance,
- Frequent risk assessments to map your organization’s policies and procedures against evolving requirements for each grant, and
- Periodic auditing in compliance with relevant guidance and statutes.
In addition, your auditor will evaluate whether your organization is willing to adapt to regulatory changes. For example, has it adopted new grant controls to accommodate best practices or legislative changes?
We can help
If juggling multiple levels of grant compliance seems overwhelming, contact us to learn how to streamline your approach. We can help your organization improve its ability to satisfy grant requirements at multiple levels.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The services of an appropriate professional should be sought regarding your individual situation.