It is vital for recipients of federal financial assistance to meet regulatory requirements and ensure the effective and efficient use of federal funds for their intended purpose ― to benefit the public. While this can be daunting, non-compliance with the Uniform Guidance can result in costly penalties, such as the revocation or reduction of grant funding, and the potential suspension or debarment from federal funding opportunities in the future, which could damage an organization’s reputation. In this blog, we will explore the importance of successful compliance in managing federal grants and how to achieve it. 

Here are five key steps for successful grant compliance:

1. Understand the Grant Agreement: Before managing any grant funds, it’s crucial to understand the grant agreement fully. The grant agreement is a legal financial assistance instrument between a federal awarding agency and a nonfederal entity. Before grantees accept award funds, they should carefully review the terms and conditions of the grant, including the reporting and compliance requirements and any potential exceptions under the grant program as allowed by federal statute. Understanding the grant agreement increases the likelihood that grant recipients will comply with the terms and conditions of the award and encourage program success.
2. Implement a Compliance Plan: Once the grant agreement is understood, grantees should develop an internal compliance plan. A compliance plan, in writing, provides an overview of the grant requirements, the timeline for each requirement, personnel responsibilities, the importance of recordkeeping, how compliance will be monitored, and the potential consequences of an audit finding for noncompliance.
3. Provide Regular Training: According to an annual grants managers’ survey conducted by REI Systems, NGMA, and George Washington University, grant management training remains a top priority for organizations. All employees involved in grant-funded activities should receive regular training on grant requirements and the organization’s compliance plan. Training should include reviews on overall grant compliance, financial management, procurement, sub-recipient monitoring, and record-keeping; this training is especially critical for new employees. Even highly experienced professionals in the field should regularly attend training to stay current with the ever-changing regulatory environment and to remain compliant.
4. Maintain Accurate Records: Expenditures of federal funds require grantees to keep comprehensive records for all grant-related activities. Documents must be complete and detailed so the organization can efficiently respond to audits or requests for information from funding agencies. Additionally, accurate recordkeeping increases transparency and accountability in the grantee’s organization between agencies and the public.
5. Conduct Regular Monitoring and Internal Audits: The Uniform Guidance at §200.501 requires nonfederal entities to have a system of internal controls to ensure compliance with federal regulations and the terms of the grant agreement. Although not required under the Uniform Guidance, internal audits can be a critical part of maintaining a robust internal control system, and organizations should consider conducting such internal reviews regularly to ensure the effectiveness of the control environment. Grantees should review the requirements outlined in the grant agreement and consider the organization’s risk assessment when determining the frequency of internal audits.

Complying with federal grant regulations is of utmost importance to ensure the success of a grant program. By following these five critical components outlined in this blog, grantees can better manage their federal funds and reduce the risk of penalties or serious single audit findings. It is important to remember to continuously plan, communicate effectively, conduct regular training, monitor progress and maintain accurate records throughout the grant’s lifespan. With over four decades of experience, Thompson Grants can assist your team by providing comprehensive and easily understandable compliance guidance. Learn how to manage your federal funding like a pro. Contact Thompson Grants today.

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Please note: This blog post is not official or legal guidance. Recipients should consult the federal awarding agency regarding whether the Uniform Guidance applies to a particular federal award. Subrecipients should consult with the pass-through entity. Thompson Grants is not a grantmaking organization and does not award grants.