Grant Management Miniseries Part II
Post-Award Monitoring
Last month, we introduced some of the challenges our clients face in the front end of the grant management process. Well, now you’ve received that grant award, it is time to embark on post-award monitoring. This portion of the grant lifecycle is often the most challenging for our clients to monitor effectively. There are several considerations and decision points at this moment:
- In what system is the award initially recorded? How does development data tie out to financial data?
- What is the correct accounting treatment? Is it an exchange contribution, or is it a contribution with conditions and/or restrictions to consider?
- How will we track and monitor dollars and/or deliverables adequately, both for invoicing and internal and external reporting?
Team Structure
This is the point in the process where technical skills become perhaps the most relevant. The people dealing with the recording and monitoring of awards must understand revenue recognition for contribution revenues and the funding environment in which they are operating. Not all dollars carry the same connotations, and some, such as federal dollars, have much more rigorous compliance requirements.
We recommend that an organization review its grant portfolio and development plan, current and strategic, and staff accordingly. Organizations with a significant volume of governmental grants and contracts should consider a compliance function to assist with education and monitoring. Organizations with a high volume of private grants, funding a variety of programs, should consider how their grant accounting function is staffed, including a senior level grant accountant who understands ASC 605 and can advise on revenue recognition determinations.
Processes
Processes can vary quite a bit in the monitoring phase, particularly if awards are conditional, which vary by grant and program. For purposes of simplicity and staying focused on finance, we discuss considerations for monitoring of restricted dollars and reimbursable grants. Typically, time and expense are key elements of tracking and monitoring. Processes for consideration should include:
- What is the process for recording the awards in both the development and finance systems, and how do they align? Is information keyed independently into each, or is there an import/export process? How often is data reconciled between the two systems? What is the communication between the two departments?
- How are program staff educated, so that they understand the grants, overall budgets, and allowable expenses?
- What is the process and cadence for tracking of time, to allow for allocation to grant and program activities? How is this data translated to an allocation of salaries and benefits on the finance side?
- What is the process for submission of purchase requests and AP invoices that allow proper coding to the grant programs?
Is there timely and accurate reporting back to program staff on budget-to-actuals per grant, in order to monitor programs effectively?
Systems
The design of the tools and technologies are critical for easing the burden of grant tracking and monitoring. Some of our recommendations include:
- Designing the financial management system that can separately track grants, programs, and restrictions. With proper set-up, the system should be able to track net asset restrictions and report on budget-to-actual for both grant and program.
- Develop a system for coding that logically groups grants by types of fund – such as governmental, foundation, corporate, etc.
- Designing a time tracking system that is user-friendly, pulls grant and program coding from the general ledger and integrates into the payroll system, so that salaries and benefits are allocated by program and grant according to time spent.
- An integrated spend management solution that is user-friendly for non-financial users and allows program staff to code to programs and grants. Built in spend controls that show requests against budget line items is ideal.
CLA regularly works with clients on all areas of operations to help improve efficiencies. Please reach out to learn more.
Jocie leads CLA’s national Business Opportunity Assessments (BOA) practice. Jocie has more than 25 years’ diverse experience in financial, operational, and IT management and leverages this experience to assist clients in assessing the structure, processes and systems of their finance and operations, with an eye to integration of cloud-based accounting systems and automated processes. Jocie's focus is on nonprofit operations.
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