Local Government Resource Desk Budgeting & Financial Management Grant Records and Administration Introduction Before applying for any grant, it is important to consider whether your organization can manage that grant. Successful grant applicants should be aware of the special management issues associated with receiving and spending grant funds and be prepared to follow the grant requirements. Grant management requires good organization and management skills. A grant will come with certain conditions, outlining the funding agency's requirements for "complying" with the grant. Many grants require monthly reporting on the status of the project and may also require back up information on the transactions for the month including payroll, accounts payable, accounts receivable, and construction status documents. Narrative The grantee (usually a municipality, tribal government, or non-profit association) is responsible for the grant money it receives. In order to meet this responsibility, a grantee needs to know what the grant agreement says and the rules that apply to each grant. At any given time a grantee needs to know how much money was received, how it was spent, and how much is remaining to be spent, as well as the status of the particular grant project or program. Grants are divided into two categories, capital improvement grants and program grants and may have different tracking and reporting requirements. Capital improvement grants are funding programs designed to help build infrastructure and are usually one-time large projects like a washeteria or community hall. Program grants are designed to provide a source of additional funds to aid in the operation of local programs or projects. It is important for local officials to understand the grant process and its importance in helping to build a better community. It is also important for local officials representing the agency receiving the grant to be kept informed on the status of open and pending grants. More than one person should have a working knowledge of the status of an agency's grants, because if only one person is actively involved in the agency's grants, the grantee will have a hard time figuring out the status of the grant if that person leaves. Frequently Asked Questions Why is grant record keeping and administration important? Granting agencies typically require reports showing how the money they provide is spent. In order to track the information to be reported, the grantee has to set up a record keeping/records management system that organizes this information in a manner that allows it to be easily retrieved, understood, and reported. The grant budget is the plan for how the grant money will be spent and needs to realistically reflect all the costs of the project and all the money available to complete the project (local as well as grant money). The grant budget must also be monitored carefully to ensure a successful grant project. Each agency that grants money has rules about how, when, and where the grant funds can be spent. Most granting agencies will require records of all financial transactions and back up documentation associated with the grant. A grantee may need to prove to the granting agency that the grant was used for exactly what it was intended. The best way to prove that is by keeping complete records of everything connected with the grant. If a grantee cannot prove the money was spent as stated in the grant agreement, it is possible that the grantee will have to pay money back and/or may not receive future grants from that funding source and possibly other funding entities that share information. Who is responsible for administering grants? Ultimately, the governing body/grant recipient is responsible for ensuring any grant it accepts is administered and completed according to the grant conditions. The actual day-to-day responsibilities are usually handled by assigned staff that ordinarily would handle the administrative and financial management duties of the organization. Job descriptions should be developed to ensure all the necessary duties are assigned. What needs to already be in place when a grant is awarded? When a grant is awarded, have specific staff assigned to administer the grant and have a reliable and user-friendly financial management and reporting system and a reliable and user-friendly records management system in place. At a minimum the grant administration system has: a working and reliable system for tracking revenues; a working and reliable system for tracking expenditures; a working and reliable financial reporting system (regular monthly financial reports to the governing body); and a working and reliable filing, retrieval, and storage system for documents and files. How do you ensure acceptable grant records and administration? Be organized. Each grant should have a unique identifier to make it possible to track and report each grant separately. Have a separate grant file for each grant and FILE ALL the information for the grant in the grant file. At a minimum, the grant file should be a four-part folder with a separate section for grant application and back up documents, grant correspondence, grant contract(s), and financial/vendor information. There should also be separate personnel files for each person hired under the grant - see the LOGON section on Payroll Record Keeping for additional information on this topic. Set up the financial records for each grant to reflect the grant budget. The grant budget forms the basis of the financial record keeping for the grant and determines the "line-item" categories that will be reported to the granting agency and governing body. Most granting agencies require a separate bank account for grant money to ensure grant funds are not accidentally spent on operating or other expenses that are not approved in the grant budget. Track all money coming in and going out. Provide timely and complete reports to the granting agency and governing body. What kind of records do I need to keep? Administering a grant requires keeping track of several pieces of information. Grant reporting requires proof that funds were spent according to the grant agreement. This means you have to show where and how the money was spent by providing copies of receipts, accounts payable, timesheets, and payroll records. Funding agencies frequently require that grant funds be kept in accounts separate from the organization's operating accounts. If operating funds and grant funds are not kept in separate accounts, there is a danger that grant funds may be spent on something that was not approved in the grant agreement. If this happens, the grantee is usually required to pay back any grant funds that were misspent. In addition to the financial records, keep construction and inspection reports, permits, engineering reports, and all other documents that show the progress of the grant project. Set up a correspondence file with copies of all the letters that have been sent and received on the grant and the grant project. Where can I get additional information on grant administration requirements? Grants usually come from one of three sources: the federal government, state government, or private foundations. The federal government provides grants through specific agencies. An example might be the Environmental Protection Agency (EPA) providing funds for a water/sewer or solid waste grant, or a bulk fuel grant from the Denali Commission. The State has several grant programs. The Community Development Block Grant (CDBG) is an examples of one such state grant program. Private foundations are a source of funds that typically deal with program grants. How do I record and track an "in-kind" match? An "in-kind" match is a non-cash contribution to the project. The match can be goods, services, land, facilities, space, personnel, equipment or materials, that are assigned a cash equivalent value. For example, if the cost of administering the grant is the in-kind contribution, the number of hours spent on grant administration and wage costs would be tracked and reported as a cash equivalent. Whenever calculating the amount of in-kind contribution to a project, use the "fair market value" or actual cost of whatever is being provided as the contribution. Will I need an audit? Whether or not an audit is required depends on how much money your organization received and spent during a certain period. State and federal laws require that an entity provide an audit if it spends a certain amount in federal or state money. This requirement should be spelled out in the agreement awarding the money. That amount was $300,000, however, that has changed to $500,000 effective December 31, 2003. (Check with the State Audit Coordinator at at 465-4666 to verify the amount.) See the LOGON section on Audits and Financial Reports for additional information. Additional Resources Publications: DCRA Grant Training Manual DCRA, Capital Projects Management DCRA, Capital Matching Grant Introductory Handbook Local Government Handbook, Chapter 3, Section 1, Managing Finances Local Government Handbook, Chapter 5, Section 1, Capital Project Planning and Management DCRA, Model Financial Record Keeping System, Chapter 9 Recommended web site search topics: Denali Commission Catalog of Federal Domestic Assistance Alaska Office of Management and Budget (OMB) OMB Single Audit Guide Legislative Audit State Audit Coordinator Federal OMB Circular A-133 Applicable Laws and Regulations Alaska Statutes AS 29.20.380 Public records, records management. AS 29.20.500 Budget preparation, capital improvement program, financial reports. AS 29.20.640 Reports. AS 29.35.100 Budget and capital program. AS 29.60.400-.440 Grants for community facilities, grant procedures, grant limitations. AS 29.60.510-.599 Municipal impact grants, purpose, limitations, records, definitions. AS 29.60.600 Human service community matching grant, procedure, contract, definitions. Alaska Administrative Code 3 AAC 154.010-.170 Municipal Capital Projects Matching Grant. 3 AAC 155.010-.160 Unincorporated Capital Matching Grant. 3 AAC 168.010-.900 Community Development Block Grant. Back to Top Revised 12/30/2014