When people think of
government grants, it’s likely their first thought is of grants for student financing enabling teenagers to attend college. However, there are many grants and sub-grants offered to businesses for a variety of reasons. Grants may be obtained to fund scientific and technology projects, medical research, conservation efforts, economic agendas, and other specific industry projects.
When a business meets the stringent eligibility requirements to be awarded a grant, they will be given a Notice of Award (NOA) by the Grants Management Officer through the federal agency offering the specific grant program, as reported by the
CDC Procurement and Grants Office. The NOA will specify the details of the funds to be given to the business and the terms and conditions of the award.
Why Tracking Your Government Grant Is Necessary
You simply cannot accept the money and bid the government farewell. The federal agency funding the program requires the grant money be managed and implemented according to the project outlined in the grant application. It is a requirement for the business to set up a management system specifically to track the awarded grant money. Using the reports generated from that tracking system, the federal agency can then perform internal control of the program and meet their own reporting requirements; avoiding mismanagement of funds and fraud, according to the
Office of Management and Budget.
The purpose of a business' management system is to safeguard the funds given to the business; especially when used to purchase assets. The management system allows the business to accurately report the financial results of the grant to the federal agency as well as maintain all records in regards to the source of the grant money and how the funds are used. The management system should cover the following business responsibilities when receiving the grant.
- Complete and current disclosure of a project's financial results
- Create accounting records regarding the source of the grant award
- Maintain accounting records for use of the grant funds (expenditures, obligations, assets, interest and income)
- Manage accountability in regards to grant funds to be used specifically for the awarded project
- Show written procedures for allocation of costs when following the grant award terms and conditions
- Maintain cost accounting records
In addition to showing expenditures and uses of the grant award to your business project, you may also be required to engage in cost sharing of the project. With an
effective management system, you can keep track of the grant award funds and your matching business funds used for the project. You can also show where the source of the matching funds is coming from to satisfy the cost sharing requirements of the grant award.
Another benefit of a
grant management system is to successfully segregate activities and costs not related to the project being supported by the grant funding. You can effectively itemize costs and relate them to the project's performance goals to show how you have stayed in compliance with the terms and conditions of the grant award.
Liabilities When Not Tracking Government Grants
The federal agency operating the grant program will perform auditing procedures of your management system. They will look for noncompliance issues where they cannot track expenditures charged to the grant award and the lack of invoices to back up these costs. If your business is found in noncompliance, you may be required to return the grant funds in full to the federal agency.
Avoid common mistakes related to grant awards and keep an accurate record of financial costs with a management system. Use the grant money wisely to further your business objectives and programs.
When people think of 
In addition to showing expenditures and uses of the grant award to your business project, you may also be required to engage in cost sharing of the project. With an