There are many compliance requirements to meet for federal or state grant funding. If you miss one requirement, it could jeopardize your funding or future funding. If grant compliance is making you sweat, you may need to perform some exercises to get in shape.  One of those exercises is a grant compliance checklist.  This checklist may be lengthy or may be split into various stages of the grant lifecycle, but by creating and using a checklist, your organization will be able to tackle an audit (without added stress),  stay compliant, avoid audit findings, and maximize funding.

What is a grant compliance checklist?

A grant compliance checklist is a tool that you create that is specific to your organization to help adhere to all the rules, regulations, and requirements stipulated by the grantor.  This is a master list to track and verify that the grant is being used appropriately, financial records are well-maintained, and all reporting obligations are met.

Why should nonprofits take the time to create grant compliance checklists?

To avoid noncompliance!  The checklist helps you to understand and meet all grant requirements. It will help prevent costly mistakes and potential audit issues. It promotes accurate and organized financial and programmatic reporting.  It demonstrates the funds are used responsibly and effectively. It may improve chances of securing future grants.

What should be included in a grant compliance checklist?

General documentation such as:

• Obtain and maintain copies of the grant agreement and amendments.
• Maintain correspondence with the grantor.
• Develop, keep up to date, grant policies and procedures.

Financial documentation such as:

• Identification within accounting software for each award.
• Maintaining general ledger detail.
• Detailed budget procedures along with maintaining a copy of the approved detailed budget.
• Maintaining support documentation such as invoices, payroll records, bank statements, and purchase orders.
• Documentation related to determining subrecipients vs subcontractors.
• Maintaining documentation of procurement.

Programmatic documentation such as:

• Preparing and maintaining performance reports.
• Preparing and maintaining progress reports.
• Documentation of activities.
• Meeting minutes.
• Evaluations or monitoring reports.

Compliance documentation such as:

• Internal control documentation for each compliance requirement.
• Documentation for each compliance requirement showing requirements were met.

Can I use a template available online?

Yes, but…  If you find a great resource online, it is great to use that as a starting point. However, you should modify and adjust it to meet the specific requirements of your awards and your personnel. Read more about the Vital Role of Customized Policies and Procedures for Nonprofits.

Should our nonprofit have more than one grant compliance checklist?

It depends.  You may have one checklist that is a higher-level checklist that takes place at certain points in the grant life cycle (consider pre-award, post-award, and closeout).  You may also have more detailed checklists for requirements that occur more frequently, such as monthly.

How our nonprofit incorporate internal controls into our grant compliance checklist?

Don’t forget your internal controls!  Make sure that internal controls are added to your checklists to address every compliance requirement you need to comply with.

Examples:

• Identify available funding and assess for compatibility.
• Outline the timeline and deliverables for the award.
• Review the grant agreement and understand the requirements imposed.
• Maintaining support documentation such as invoices, payroll records, bank statements, and purchase orders.
• Documentation related to determining subrecipients vs subcontractors.
• Add reporting requirements to the schedule.
• Understand closeout requirements.
• Review policies and procedures to ensure all required are up to date and complete.
• Procurement history is documented based on threshold per policy and procedures.
• Monitor subrecipients and maintain documentation.
• Set up internal controls and segregation of duties.
• Prepare cost allocation plan.
• Determine indirect cost rate or de minimis rate.
• Train staff on compliance requirements.
• Ensure sam.gov registration is active.
• Prepare a grant proposal.
• Review and sign grant agreement.
• Prepare a detailed budget per award requirements.
• Set up tracking of expenses within the accounting software.
• Invoices have been reviewed and approved as allowable and are maintained.
• Time and effort are documented and reviewed and approved for accuracy.
• Award budget to actual is analyzed and variances addressed.
• For each new relationship a subrecipient vs subcontractor determination form is completed and reviewed so that all aspects have been considered and determination is appropriate.
• Review cost sharing meets requirements.
• Review and approve reports as complete and accurate.
• Review final budget to actual and submit final reports.

How can our nonprofit know if our grant compliance checklist is enough to stay truly audit-ready?

Even the most detailed checklist can leave room for uncertainty, especially when it comes to federal funding requirements. Grant requirements can change, internal controls may need updates, and certain audit standards, like distinguishing subrecipients from contractors or applying indirect cost rates, require more than a box to check. That’s where expert insight becomes invaluable. Our single audit advisory services help nonprofits strengthen internal controls, refine compliance processes, and approach single audits with confidence and clarity. With the right support, your organization can feel confident in safeguarding funding and staying focused on your mission. Reach out to our advisors to learn more.