A Grant Manager’s Guide to Internal Controls

Can you believe that $600 billion is awarded each year in federal grants?? The new OMB Uniform Guidance Administrative Requirements place tremendous emphasis on grantee internal controls. So, what are they? Why should you care? How do they impact your grants and your organization?

According to Section 200.303 Internal Controls are crucial to the grants management world because:

  1. They safeguard funds, property, and other assets against fraud, waste, loss, abuse, or misuse.
  2. They assure reasonable accuracy, validity, and reliability of financial management, program, and other information.
  3. They assure adherence to Federal statutes, regulations, and the terms and conditions of the Federal awards.
  4. They promote operational economy, efficiency, and effectiveness.

Whether your title is formally grant manager or not, it is important that you understand your role and have proper procedures in place for excellent grants management.

To help you understand your role I’ve outlined 6 key focus areas for grant managers related to internal controls.

6 Key Focus Areas for a Grant Manager

  1. Written Policies & Procedures
    • Review the policies & procedures required by the grantor; a grants manual can be highly beneficial for this process.
  2. Importance of Project Director’s Signature
    • The Project Director must review & sign the expenses to be paid under the grant.
  3. Accurate & Effective Accounting Information System
    • An excellent accounting system is a must to record, process, summarize, and report all grant transactions and to comply with 2 CFR 200.
  4. Implementing Segregation of Duties
    • It is highly critical that no one individual should perform more than one of the responsibilities of authorizing, approving, and recording transactions. Having a proper procedure for segregation of duties will avoid fraud, waste, & abuse of grant funds.
  5. Timely Review of Grant Expenditures
    • One of the best pieces of advice I can give you is to monitor all grant expenses monthly. At the beginning of the new month, review all prior month grant expenses; this reconciliation process will assist you in verifying grant funds are charged accurately. If you notice errors during your review, you can make corrections at that time; this will be critical when you compile your annual financial report.
  6. Providing Monthly Grant Reports to the Project Director’s (PI’s)
    • A project director must know how the grant is being charged and what expenses have been incurred by the grant. The financial office must provide a monthly or quarterly grant report for PI so that they can review the grant budget & expenses.

At the end, internal controls are designed to provide reasonable assurance in regards to effectiveness & efficiency of operations, reliability of financial reporting and compliance with federal laws & regulations.

I hope this blog post will serve as a guide for you as a grant manager and your organization as you review and manage federal grants. I would love to hear your tips about internal controls, please share your comments in the comments section of the blog, via social media or drop us an email at info@dhleonardconsulting.com.


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