Preparing for Grant Audits: A Checklist for Finance Teams

Grant audits don't have to be stressful. With proper preparation, you can walk into any audit confident that your documentation is complete and your processes are sound.

This checklist covers what you need to prepare for single audits, funder-specific audits, and internal reviews.

Before the Audit: General Preparation

Start preparing well before auditors arrive:

• <strong>Review prior audit findings</strong>: Address any outstanding issues
• <strong>Update your policies</strong>: Ensure written policies match actual practices
• <strong>Organize your files</strong>: Both physical and digital documentation
• <strong>Brief your team</strong>: Everyone should know their role during the audit

Documentation Checklist

For each grant, ensure you have:

Grant Agreement and Modifications - Original grant agreement - All budget modifications - Correspondence about scope changes - Extension requests and approvals

Financial Records - General ledger detail for all grant expenses - Bank statements showing payments - Payroll records for labor charges - Credit card statements (if applicable)

Supporting Documentation - Vendor invoices for all expenses - Receipts for purchases under threshold - Contracts for major vendors - Competitive bidding documentation (if required)

Time and Effort - Timesheets or time certifications - Allocation methodology documentation - Calculations for split-funded positions

Invoices and Payments - Copies of all invoices submitted - Proof of funder payments received - Reconciliation of invoiced vs. paid amounts

Single Audit Specifics

If you're subject to a Single Audit (federal expenditures over $750K):

• <strong>Schedule of Expenditures of Federal Awards (SEFA)</strong>: Accurate and complete
• <strong>Internal controls documentation</strong>: Written policies and procedures
• <strong>Compliance testing support</strong>: Be ready for sample testing
• <strong>Corrective action plans</strong>: For any prior findings

Funder Audit Specifics

Individual funders may have additional requirements:

• <strong>Program reports</strong>: Narrative and statistical reports
• <strong>Outcome documentation</strong>: Evidence of program results
• <strong>Matching funds</strong>: Documentation of required match
• <strong>Subrecipient monitoring</strong>: If you pass funds through

Common Audit Questions

Be prepared to answer:

• "How do you determine which expenses are eligible for this grant?"
• "Walk me through your invoice preparation process."
• "How do you allocate shared costs?"
• "Who approves expenses before they're charged to grants?"
• "How do you track budget vs. actual spending?"

During the Audit

When auditors are on-site:

• <strong>Designate a point person</strong>: One person to coordinate requests
• <strong>Respond promptly</strong>: Don't let requests pile up
• <strong>Be honest</strong>: If you don't know, say so and find out
• <strong>Take notes</strong>: Document what was requested and provided
• <strong>Don't volunteer</strong>: Answer questions, but don't over-share

After the Audit

Once the audit is complete:

• <strong>Review findings carefully</strong>: Understand what was cited and why
• <strong>Develop corrective actions</strong>: Specific, measurable, time-bound
• <strong>Implement changes</strong>: Don't wait for the next audit
• <strong>Document improvements</strong>: Show auditors you took action

Conclusion

The best audit preparation happens year-round, not in the weeks before auditors arrive. Build good documentation habits, maintain organized files, and address issues as they arise.

When you do this consistently, audits become a routine verification of what you already know: your grant management is solid.