Welcome to Feldesman’s Grants Practice Shorts series where we discuss helpful tips and strategies in common areas of federal grant management. Be sure to check out our other installments on our Grants Practice Shorts page.

The Uniform Guidance establishes key requirements governing the allowability of grant-related costs. Among the most important is the obligation to maintain clear, accurate, and complete supporting documentation.

Organizations must retain records that identify the amount, source, and use of federal funds, with sufficient detail to track:

• Specific grant awards
• Approvals and Spending Authority 
• Obligations
• Remaining unobligated balances
• Expenditures
• Program Income
• Earned Interest

For organizations with multiple federal grants, proper tracking of each funding stream is critical. This is especially true when supplemental grant funding is rolled into an existing base award.

If grants compliance had a “North Star,”  it would be proper subaccount coding. Establishing distinct account codes within your financial management system for each award and sub-award allows organizations to accurately track drawdowns and expenditures. Without creating subaccounts at or before the time funds are drawn, it becomes significantly more difficult to separate, support, and justify grant-related costs.

The HHS Departmental Appeals Board has consistently emphasized that grant recipients bear the burden of demonstrating that costs are allocable, allowable, and reasonable. As a result, federal agencies may disallow expenditures of grant funds that are not supported by adequate documentation. Organizations should ensure that their financial systems capture contemporaneous records sufficient to substantiate all grant-related costs, particularly in the event of monitoring, audit, or enforcement action.

Feldesman’s federal grant attorneys provide practical, experienced guidance to help organizations navigate compliance requirements while supporting operational and business objectives.

If you have any questions or would like additional information, please contact Phillip Escoriaza or Adam Oppenheim.