As many grant-related activities wind down after the end of the instructional year, it’s not too late to assess grant-related internal controls and consider implementing improved processes before organizing data for the upcoming submission of final expenditure reports. Sufficient internal controls are essential because noncompliance and data quality issues related to grants place a school district at greater risk of financial penalties than nearly any other area of school district management and administration. If not already in place, your district should identify an employee in management, that is not involved in the day to day procedures and processes related to grant-related transactions, that can be assigned responsibilities for review and approval of certain grant-related tasks including:
- Expenditure reports supporting cash drawdowns
- Adjusting journal entries
- Allowable versus nonallowable cost allocations for certain invoiced costs involving select vendors
- Allocations of costs benefiting multiple grants or cost objectives
- Analysis of various original source documents supporting eligible expenditures
- Time and effort accounting calculations and allocations
- Accrued wages and benefits records
- Split-funded staff payroll and benefit records
- Prepaid expenses recorded in certain months
- Refunds, rebates, program income or other reductions to expenditures
- Projections supporting the need to apply for an amendment to a grant application
In mid- and large- enrollment size school districts, it’s a best practice to implement centralized control processes involving cross-functional teams to review and approve grant-related tasks listed above. If nothing else is accomplished in improving internal controls, it’s important to not permit the district’s grants management office to submit expenditure reports in isolation without sufficient review and verification by business office staff (in addition to other administrative offices, including budget, human resources and payroll).
Finally, it is recommended that management outside of the grants management office be involved in evaluating the size of any potential new or subsequent grant awards in relation to the time-on-task to complete and submit the application, and comply with all of the relevant laws and regulations, in addition to fulfilling all of the reporting responsibilities. Following this high-level review, a legal review should be applied any new grant(s) before submitting the grant application(s).
It takes a team to avoid being a “silo” organization that may be at risk of adverse financial impacts that are associated with insufficient internal controls over grants management.