Navigating Federal Grant Compliance

When it comes to managing federal grants, it’s important to understand the concepts of all 12 compliance requirements within the Uniform Guidance. These compliance requirements are tested by your auditors and can be found within the compliance supplement.

Let’s start by looking closer at three of those 12 compliance requirements: Activities allowed and unallowed (A), allowable costs/cost principles (B), and period of performance (H).

Activities allowed and unallowed

Allowable activities are the specific actions or tasks permitted under the grant agreement. These activities must be directly related to the objectives of the grant and must be performed in accordance with the terms of the agreement.

The specific requirements for allowable activities are tailored to each federal program. It’s important to review the grant agreement’s program and federal award agency regulations to determine which activities are allowable.

Allowable costs/cost principles

Allowable costs are expenses permitted under the terms of the grant agreement and federal regulations. These costs must be reasonable, allocable, consistently applied, and necessary for the performance of the grant.

Allowable costs can consist of both direct and indirect costs related to the federal grants. Review the grant agreement and the applicable cost principles under Uniform Guidance 2 C.F.R. Part 200 to determine which costs are generally allowable.

Each federal awarding agency may have more specific requirements regarding federal expenditures, so understanding those requirements also is key to your overall grant management.

Period of performance

The period of performance is the timeframe during which grant funds may be used. This period is specified in the grant agreement and must be adhered to. Costs incurred outside of the period of performance are generally not allowable unless otherwise approved by the awarding agency.

Costs incurred during the period of performance must be liquidated within 120 calendar days after the end of the period of performance. It’s essential to carefully track the period of performance to determine compliance with the grant agreement.

To sum it up, thoroughly reviewing grant agreements and applicable regulations can help establish that all grant funds are used in accordance with the terms of the agreement. Understanding allowable activities, allowable costs, and period of performance concepts is crucial in managing federal grants, staying in compliance with federal regulations, and avoiding audit findings.

Stay tuned for subsequent blog postings that will address the other compliance requirements.

How we can help

Set aside time to understand the compliance requirements applicable to the grants included in your organization’s Schedule of Expenditures of Federal Awards. If you would like further assistance or possible training opportunities for your organization, CLA has team members experienced in grant compliance services.