By Dwight Buracker

As our government clients strategically manage finances to meet the increasingly complex needs of the public, compliance with grant requirements helps reduce waste and enables the grant amount to accomplish more.

Failure to comply with grants administration requirements is common but often unintentional. The source of the problem is typically a lack of communication or misunderstanding of compliance requirements.

We’ve summarized the list of GFOA best practices for grants administration below.

A Peek Behind the Requirements

Requirements govern various aspects of receiving, administering, operating, and reporting every grant.

By establishing proactive policies and processes, it is possible to promote awareness surrounding the many requirements that accompany grants administration and avoid the negative consequences of failing to meet the various requirements.

2022 Update to Grants Administration Best Practices

In 2022, GFOA’s Executive Board published a best practices update for grants administration.

Key changes include:

  • Recommendations for federal grants are now segmented into two groups — grants administration and internal controls for grants.
  • Establish an additional process for reviewing government grant programs after implementation.
  • Promote additional awareness about the many requirements that accompany grants, through formal processes and policies.

Summary of Best Practices for Grants Administration

Best practices for grants administration include establishing and maintaining a process that accomplishes the outlined objectives within the following areas:

Administration and Operation

  • Track changes in grant terms and conditions that might occur subsequent to accepting a grant
  • Provide initial training for new and unfamiliar grant procedures
  • Document how to handle specific issues that arise in a compliant manner (e.g., eligible expenditures)
  • Identify specific timelines and personnel responsible for carrying out each requirement

Financial Management 

  • To properly account for financial transactions, establish a central management function
  • Assign unique identifiers to activity within each grant fund
  • Document cash management procedures (e.g., receipt, drawdown, disbursement, etc.) and ensure any costs charged are compliant
  • Standardize procedures for reconciling internal records against federal and state reports
  • Incorporate grants into annual budget procedures and cash flow planning
  • Develop a contingency plan should grant funding be cut or terminated altogether

Systems Management

  • Ensure that systems enable all involved parties to access information that is critical for compliance with GAAP and grant requirements
  • Document and monitor the use of grant-funded capital items
  • Track information for non-cash grants

Subrecipient Monitoring

  • Document how subrecipients will submit progress reports, what constitutes timely reporting
  • Monitor and report subrecipient compliance
  • Develop procedures for addressing Single Audit Reports

Communications

  • Maintain ongoing communication with the following individuals:
    • Grant sponsor/provider
    • Those with oversight responsibility, including, when applicable, the Federal Cognizant Agency
    • External financial statement and Single Audit providers
  • Consider establishing an interdisciplinary task force that meets regularly to discuss implementation and progress concerning best practices

Specialized Reporting Requirements

  • Maintain a reminder system for meeting reporting deadlines
  • Designate responsible party for each reporting requirement
  • Establish processes for report preparation, approval, and information gathering related to the Schedule of Expenditures of Federal Awards

Auditing Requirements

  • Document all grant-related audit requirements, including those in:
    • Generally Accepted Government Auditing Standards
    • Generally Accepted Auditing Standards
    • Uniform Administrative Requirements
    • Cost Principles
    • Audit Requirements for Federal Awards (Uniform Guidance)
    • Grant close-out

Post-Implementation Review

  • Identify program shortcomings once implementation is complete using the following questions as a guide:
    • Did the program achieve its goals?
    • How were any process issues identified by staff, grantor, or auditors resolved?

Source [1]

Learn More

Properly managing federal grants is a critically important function.

By ensuring that grants have adequate oversight and that information is effectively disseminated among stakeholders, you can avoid unaccounted-for funds and the many negative consequences that can result from noncompliance, including the loss of funding.

PBMares has a team of government-focused professionals that few other firms can provide. Our state and federal audit teams conduct pre-audit assessments that uncover and address potential compliance issues, so you can maintain the funding you rely on. Contact our team today.

[1] The complete list of Best Practices for Grants Administration from the GFOA can be found here.