Tip #10 – Questioned Federal Grant Costs

Why Some Costs are Questioned:

·       They can be unallowable based on requirements contained in regulations, laws, and award conditions

·       They can be unreasonable because of their nature or amount

·       They can be subject to a prior approval from the funder that was not obtained

·       They could be lacking sufficient support documentation

·       They could be incurred contrary to the recipient’s own policies

·       They could be claimed or incurred before required procedural steps were taken

How to Avoid or Minimize the Potential or Reality of Questioned Costs:

·       Before applying for a federal grant:

o   1. Develop a Project Team to facilitate the program or project

o   2. Thoroughly read the Notice of Funding Availability (NOFA)

o   3. Methodically develop the components of the grant application, including the need, design, goals, evaluation , sustainability, budget

·       While managing the grant:

o   1. Understand the regulations that apply to federal grants, especially 2 CFR Part 200 Uniform Guidance (aka: Super Circular)

o   2. Develop financial and operational internal controls with detailed policies and procedures

o   3. Conduct a re-occurring self-monitoring process

·       When it happens:

o   1. Don’t panic – realize that you’re not alone, so look for those who can help

o   2. Seek to understand – ask the funder (or auditors) or others why the costs are questioned to better present your interpretation

o   3. Continuously improve – determine the cause and how to prevent similar situations