Compliance and Documentation: Cornerstones of Effective Grants Management

  • Regulations
  • 8/14/2017
Conference Room Reviewing Documents

One constant in the ever-changing regulatory environment should be your commitment to a solid grants management and compliance program.

Federal grants management is constantly changing. There are updates in the regulations, transitions between administrations, and increases in monitoring activities by awarding agencies, just to name a few. In this shifting environment, it is imperative to remember that grant compliance is the cornerstone to proper grants management.

The key to an effective grant compliance program is understanding the requirements of your grant, and then designing and documenting your policies and procedures to adhere to those requirements. Without well-planned and effective grants management and compliance, your organization could encounter audit findings, be designated a high risk grantee, suffer bad press, be forced to return funds, and — worst case scenario — lose future or potential funding opportunities.

Learn the requirements for your grants

Effective grant compliance starts with an in-depth understanding of the grant requirements, which can help you determine the appropriate resources and personnel needed to meet them. Where can you find the applicable regulations? There could be multiple sets of rules that you need to follow: 2 CFR Part 200, The Uniform Administrative Requirements, Cost Principles, and Audit Requirement for Federal Awards (known simply as Uniform Guidance or UG), state statutes and regulations, as well as the specific terms and conditions of each federal award.

A grant compliance program includes a strong internal control structure to ensure that all of the requirements are achieved. The UG directs organizations to establish and maintain effective internal controls over all federal awards, but you must exercise judgement in determining the most appropriate and cost-effective procedures in a given circumstance. Factors such as personnel, resources, and specific compliance objectives should be considered when structuring your internal controls.

Documenting policies and procedures

Another key to an effective grants management program is ensuring that proper policies and procedures are in place and documented. The reasons for this are twofold:

  • Internally, they can provide clarity and instruction to those involved in grant management.
  • Externally, they can show either current or potential funding agencies that your organization has a program in place to ensure full compliance.

The UG requires that organizations have the following documented:

  • Written procedures to implement the payment requirements of 2 CFR §200.305.
  • Written procedures for determining the allowability of costs in accordance with Subpart E — Cost Principles and the terms and conditions of the federal award.
  • Procurement procedures that reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the procurement standards identified in 2 CFR §200.317 – 326.
  • Standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts, as required by 2 CFR §200.318 (c).

While these are the only procedures that must be documented in writing, the best practice is to have documented policies and procedures for your other compliance areas. This will ensure that your organization understands and has the proper program in place to address the compliance requirement, and will demonstrate the same to your funders.

You must also remember that responsibility for proper grant compliance rests with all departments involved: accounting/finance, contract/legal, procurement/purchasing, and program personnel. Make training available to everyone in your organization who is involved in grant management so all parties understand the compliance requirements and the policies and procedures your organization has in place to meet them.

Changes in potential funding opportunities

In May 2017, the Trump administration proposed a fiscal year 2018 budget that includes significant increases for the Department of Defense, Homeland Security, and Veterans Affairs. However, there were major cuts across the board, including $2.68 billion from 19 agencies that were left out of the budget. Should the proposed budget be approved, the competition for available funding will be aggressive.

The Trump administration has also made known that it wants to reduce waste and ensure accountability in federal spending, so you will need to show potential funding agencies that your organization takes that initiative seriously. You can do so by constructing a grant compliance program that is designed to provide reasonable assurance that you will achieve these objectives:

  • Transactions are properly recorded and accounted for
  • Funds, property, and other assets are safeguarded against loss from unauthorized use or disposition
  • Awards are being managed in compliance with laws and regulations

Increased agency monitoring

We have seen a significant uptick in the number of desk reviews and financial control reviews being conducted by federal agencies. These actions generally target organizations that are under the single audit threshold and are most likely a response to the increased monitoring requirements that come with the UG. Awarding agencies have designed these reviews to ensure that organizations are using funds properly, and are largely focused on policies and procedures. This is yet another reason to be proactive and get your policies and procedures documented.

How we can help

Our team of grant compliance professionals can help you navigate the regulations, assist with documenting your policies and procedures, and provide insight tailored to your specific grants. In addition, we have identified other grant issues that concern you most and developed methods and tools, including a Uniform Guidance implementation checklist, articles, recorded webinars and presentation slides, and a subrecipient risk assessment matrix to help you meet these challenges.

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