3 Lessons Learned: Grant Auditing

Preparing for a grant audit can be quite intimidating. I can recall spending countless hours at work, sometimes even staying the night, creating new report templates, performing data quality checks, reading last minute updates to the Federal Register, finalizing budget narratives, and updating performance measures. Grant writing professionals are generally regarded as first-line technical assistance providers in preparing for audits, both internal and external, because of (a) their first-hand knowledge of the grant i.e. it’s scope or performance of work, budget, management plan, deliverable schedule, etc. and (b) their stewardship of internal and external auditing controls, protocols, and procedures i.e. grant administrative handbook(s), financial accounting protocols, procurement processes, grant administration, standard operating procedures, etc. Many of these lessons learned apply to nonprofit organizations, to include those organized as charities, membership or trade associations and chambers of commerce, and most public entities. This list is published, in part, to provide a fresh perspective and to inspire greater collaboration for active grant and proposal writers, their enthusiasts, and avid supporters. 

#1 Get real clear about the regs.

Nearly every grant will be audited according to:

• internal protocols and procedures (i.e. SOPs, policy flowcharts, workflows) , or 
• external rules and regulations, statutes (i.e. local, state, federal), evidence based best practices and administrative standards (i.e. Financial Accounting Standards Board), or 
• a combination of both.

It’s best to assume that if a grant audit can take place, then it will. Understanding evidence based and/or industry best practices and documented lessons learned as it relates to your grant, or another grant that is similar, begins with thorough review and scrutiny of regularly published and updated rules and regulations. These rules and regulations generally govern the performance of work on a grant (i.e. evaluation metrics that determine whether a stated goal on a grant is met, unmet, or exceeded). 

For starters, consider bookmarking the eCFR – electronic Code of Federal Regulations and the OMB – Office of Management and Budget Circulars.

#2 Know what all is going to be subject to audit. 

A grant audit usually entails an organizational audit. This is why I caution grant seekers against submitting for just any grant without researching its requirements ahead of time, especially as it relates to payment terms, or drawdown schedule, over the lifecycle of the grant, reporting frequency and auditing. Grant administration and grant management do not function or operate in a vacuum. In order to best understand how a grant is performing according to requirements, grantors typically seek to evaluate the environment in which the grant is operating. Grantors have long approached the evaluation of grant administration and performance from the standpoint of process improvement – the more effective and efficient, the better. Drawing from the DMAIC process or methodology in Lean Six Sigma, grant audits involve identifying problems or process deficiencies, defining them by their customer’s needs, measuring the problems or process deficiencies, analyzing their root cause(s), proposing and implementing improvement(s), and mistake proofing or otherwise controlling to ensure the continued success of the improvement. As you can imagine, this level of detail can have extraordinary benefits for a department or unit within the organization. But the benefit is not realizable at the departmental level; to be realizable, the improvement must be adopted and observed by the organization overall.  

#3 Avoid deficiencies with communication. 

Audit deficiencies are preventable. Often, costly errors in grant management are attributed to a lack of communication of grant requirements to all grant impacted stakeholders. A critical component of preparing for a grant audit is to involve every member of the team (i.e. those who are directly compensated or supported on your grant budget as well as those who are indirectly compensated or supported on your grant budget, also referred to as overhead or chain of command). Having complete knowledge of what is required for a good or positive audit relating to your grant is a tacit, and other times explicitly stated, expectation of our first-line technical assistance providers on grants. Audit deficiencies costs departments time (i.e. audited deficiencies require near immediate correction, usually), resources (i.e. human resources, materials goods, etc.), reputation (i.e. poor audit records and reviews may prevent future grant award(s)), and sometimes cash (i.e. repayment of restricted grant funds not spent as allowed from the organization’s general fund (not grant funds)). 

About the Author

La Juana (LJ) Chambers Lawson is a business owner and growth consultant who has written grants and proposals for more than fifteen (15) years for organizations based in the USA and abroad. Through her business, Tacit Growth Strategies, LJ consults and trains nonprofits, government agencies, school districts, and private firms in all aspects of how to write competitive grants and proposals, how to grow with project management and strategic planning, and a plethora of training related to diversity and inclusion. She specializes in: helping contract (i.e. RFP/RFQ/RFI/RFA/IFB) and grant award seekers develop competitive proposals, strategic partnerships, nonprofit leadership, management, and administration, drug court research and evaluation, innovative curriculum development, as well as professional development and training.

Learn more about La Juana’s work at: https://growthistacit.com/. Purchase LJ’s book Earned Value Formula Pocket Book and Guide online at: https://growthistacit.com/product/earned-value-formula-pocket-book-and-guide/ or https://www.amazon.com/Earned-Value-Formula-Pocket-Guide/dp/1672885760.  Read more from LJ at: https://growthistacit.com/articles/.