Finance
Grant Compliance
Compliance is the cornerstone of grant management as it ensures transparency, accountability, and the proper utilization of funds. The key to an effective grant compliance program is understanding the requirements of your grant and then designing, documenting, and implementing your policies and procedures to adhere to those requirements.
Benefits of grant compliance
- Your organization will prevent audit findings
- Your organization will enjoy positive press
- Your organization will be designated a low-risk grantee
- You increase your organization’s potential for future opportunities
Federal Guidelines for Grant Compliance
Although each grant is unique, rules and regulations are attached to all awards, and there may be multiple sets. Listed below are two essential rules for determining compliance. They are the Code of Federal Regulations, particularly the section devoted to federal grants and contracts, 2 CFR section 200, and your grant’s Special Conditions in the Notice of Award.
Learn the rules and regulations that govern your grants because your organization should have a grant management system that meets the required standards.
Uniform Guidance (UG)
The UG is one of the most valuable resources for determining grant compliance requirements. Part 2, Section 200 (2 CFR 200) is devoted to federal grants and contracts issued by the federal agencies and departments of the United States.
It serves as the official set of rules and regulations for federal grants, consisting of Administrative Requirements, Cost Principles, and Audit Standards for all Federal Awards.
Unless regulations unique to the authorizing legislation state otherwise, this UG applies to all federal funding recipients, making it a crucial resource for grant management planning.
Grant Agreement Terms and Conditions
The federal agency may also place specific terms and conditions on your organization. These could include (among other measures):
- Payment on a reimbursement basis
- Establishing additional prior approvals
- Increased reporting frequency
- Programmatic and financial reporting
- Prohibited uses of federal funds
- Consultant rates
- Additional program oversight
Your organization will need to constantly review the grant agreement specific to the award – the Notice of Award document – as this may contain additional requirements or changes that would need to be applied for compliance.
Generally Accepted Accounting Principles (GAAP)
GAAP is an accounting practice required for profits, not-for-profits, and government entities across the U.S. It standardizes the classifications, assumptions, and procedures used in accounting in industries to provide clear, consistent, and comparable information on an organization’s financials. Following GAAP ensures financial information is consistently and accurately reported.
The UG for federal awards requires allowable costs, rental costs, interest, depreciation, compensation and fringe, and audits to be in accordance with GAAP. In basic terms, there are three golden rules of general accounting:
- Debit the receiver and credit the giver;
- Debit what comes in and credit what goes out; and
- Debit expenses and losses credit income and gains form the bedrock of double-entry bookkeeping.
How To Achieve Grant Compliance
Upon receiving your award, familiarize yourself with the administrative guidelines and requirements outlined in your award agreement, sometimes known as the Notice of Award. You need to know:
- The contract amount and terms
- Funding sources and applicable guidance
- The scope of work
- Key contacts for the grantor and within your organization for grant management
- Allowable vs unallowable costs and activities
- Reporting requirements
You need to continue increasing and improving your capacity to thrive in this changing and challenging environment to ensure solid grant compliance. You can achieve this by:
- Hiring enough skilled employees to carry out deliverables
- Investing in a proper financial management system
- Ensuring your organization has adequate office space
- Having the ability to say ‘no’ or assess the need for additional tasks before accepting the responsibilities
How We Can Help
- Compliance management to ensure transparency, accountability, and the proper utilization of funds
- Implementation of the correct internal controls via required policies and procedures
- Choosing a financial management system that meets UG requirements
- Providing adequate documentation collection and retention
- Adherence to audit requirements
- Creation of a Board of Directors
- Management of the internal capacity
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