Sneak Preview: Strong Policies Can Enhance Financial Oversight

(The following was excerpted from a recent article in the Federal Grants Management Handbook.) Grant recipients should establish solid internal policies to ensure that they are complying with all financial reporting requirements while never losing sight of the intended mission of their federal awards, a Nevada-based official told attendees at the National Grants Management Association’s (NGMA) annual grants training recently held in Crystal City, Va.

“The results of your [financial] reports and your reconciliations, especially in your closeout, are a direct result of the business practices and business management that you apply to your grants,” according to Jessica Hoban, policy and communications chief for the Nevada Office of Chief Information Officer, adding that these practices should include continuous review of policies and procedures, internal controls and training efforts. “Grants are complicated, but if your practices are based on a good foundation, they can carry you throughout the grants lifecycle.”

Hoban emphasized three primary “pillars” for proper financial oversight of grants — cash management, time management and performance measures. She warned that recipients should avoid supplanting funds (i.e., federal funds must be used for the awarded program, either new or existing, not to replace state and local funds or services that would otherwise be provided). “You don’t want to take grant funds from one grant and give it to another; that’s not good management of public funds,” she said.

Also, Hoban noted that some recipients may have grants in which the project performance year differs from the entity’s fiscal year. She urged recipients to develop policies and procedures that address how to manage awards when there are competing timelines, particularly as it affects grants closeout. “Make sure you close out your grant responsibly, and that you are not spending outside the time parameters of the federal award,” she said, adding that proper record retention also is critical. “Even though your [organization] may have a certain time period when dealing with a grant, the record retention period requirement at the federal level begins when [the] grant ends, so if you have a multiple-year federal award, the first day of your retention period does not start until the grant ends”.

Hoban also discussed grantee obligation and expenditure periods, explaining that recipients should spend funds on a “first in, first out” basis. For example, if an organization receives annual awards for multiple years, the organization should spend all the funds for the first year before spending funds from the second year’s award. (A discussion of the “first in, first out” requirement can be found at Chapter 8.4.1.5.4 of the NIH Grants Policy Statement.)

(The full version of this story has now been made available to all for a limited time here.)
Join us for our following Federal Grants Forums:
Pittsburgh, Pa., July-23-25, 2019
Dallas, Texas, Oct. 16-18, 2019
Learn more at http://grants.thompson.com/conferences.aspx