Preparing for a Grant Audit: Best Practices and Helpful Tips

Preparing for a Grant Audit: Best Practices and Helpful Tips image
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A grant audit is a thorough examination of an organization’s financial records and activities related to a grant, conducted to verify that funds were used appropriately. Preparing for a potential grant audit can set the stage for successful grant management.

Grant audits can occur whether you are a non-profit organization, city, county, state, municipality, tribal government, or a for-profit business. Audits are inevitable for any entity expending $750,000 or more in federal grant funding per year. As a best practice in grant management, staying prepared and avoiding surprises is prudent, and this is also true in audit preparation to ensure you are ready when the time comes.

Best Practices for Preparing for a Grant Audit

Once you have been awarded a grant, it is crucial for the grant management team to familiarize themselves with the grant’s requirements and apply them to all aspects of grant management. Maintaining a thorough knowledge of your grant prepares you to undergo a grant audit when one is conducted.

This includes keeping detailed and organized records of all grant-related activities, such as financial records, receipts, reports, correspondence, and copies of any checks received. Conducting regular internal reviews of all such activities will aid in identifying and rectifying any discrepancies or issues before an official audit is required.

You can lessen the burden on yourself by ensuring all necessary staff involved in grant management are well-trained and aware of any organizational responsibilities. This includes understanding compliance requirements and proper documentation procedures. It is also key to implement strong internal controls to prevent fraud, waste, and abuse in the grant management process. This could entail the segregation of duties, regular reconciliations, and oversight mechanisms.

Preparing for a Site Visit

When everything is running smoothly in your grant management process, you will be prepared for a potential site visit from auditors. Ensure all grant documentation is accessible, and that staff are prepared to answer potential questions and demonstrate compliance.

Regularly reviewing guidelines from grantor agencies is another way to ensure you are prepared for a site visit. It is prudent to stay informed about changes in federal regulations and grant management practices. Set aside time regularly to review and organize your documents, preventing a backlog and ensuring everything is up to date.

Organizational Resources for Grant Management 

There are many available resources that can help you stay on track in the grant management process. First, a Gantt chart can track grant operations visually, showing tasks and dependencies. Free Gantt templates are available on Excel or Smartsheet, allowing you to assign a number to each grant. SharePoint or Smartsheet folders also have the ability to organize each grant, including all relevant documents, assigning a number matching the Gantt chart, which can ease the process of tracking costs.

Organizing all grant documents in chronological order effectively tracks expenditures. This process simplifies retrieving and examining records during audits and ensures clear, sequential transaction records. However, another approach is to categorize documents by type — such as invoices, receipts, or canceled checks — and then organize them chronologically by each category. This can make it easier to locate specific types of documents quickly.

Always back up your digital records on an external hard drive or cloud storage device to prevent data loss.

Next Steps in Grant Audit Management

Preparing for a grant audit necessitates meticulous planning and organization. Your organization can ensure readiness by maintaining thorough records, understanding grant requirements, conducting regular internal reviews, training staff, and implementing strong internal controls.

Utilizing tools such as Gantt charts, SharePoint, or Smartsheet folders and maintaining both chronological and categorical organization of documents will further streamline the preparation process. Regularly review, digitize, and back up your records to prevent loss and ensure easy retrieval. These best practices and tips will help you navigate the complexities of grant audits with confidence and efficiency.

Consider engaging external experts or consultants to assist with grant management and audit preparation. This expertise can help identify potential issues and provide solutions before an audit even occurs.

 

FirstCarbon Solutions, an ADEC Innovation, comprises a team of in-house grant specialists who support organizations through all stages of the grant process whether it's identifying grants you may be eligible for, applying for grants, or managing the grant after it has been awarded. Contact us to schedule a free consultation and discuss your questions together.
This blog provides general information and does not constitute the rendering of legal, economic, business or other professional services or advice. Consult with your advisors regarding the applicability of this content to your specific circumstances.

About the author

Trudie Porter Biggers

Trudie Porter Biggers thumbnail

As a Grant Consultant since 2014, Trudie possesses over a decade of relevant experience in the competitive nonprofit sector. She has consistently succeeded in writing and securing grants from various sources, such as the US Department of Agriculture, the National Endowment for the Humanities and Arts, the Bureau of Land Management, and the US Bureau of Reclamation. Her areas of specialization include grant research, writing, budgeting, and compliance reporting, covering diverse topics such as agricultural farm-to-food pantry initiatives, healthcare, housing insecurity, arts, music and culture, irrigation and water quality, and historic preservation. Ms. Biggers also has extensive experience in direct project management, enabling her to craft proposals that support state, county, and city governments and private development clients in obtaining funding for the sustainable use of environmental resources. She is trained in NEPA, CEQA, and PFAs and is a registered professional grant writer with the American Grant Writers’ Association, Inc.

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