Beyond the Award: Key Steps After Receiving Grant Funding 

Receiving grant funding is a meaningful milestone for any government. It often signals growth, expanded programming, or the ability to pursue new initiatives. Along with that opportunity comes added responsibility. Understanding how to properly account for grant funds and evaluate potential Single Audit requirements is critical to staying compliant and maintaining transparency. 

Establishing the Right Framework for Grant Funding Compliance

The first step after receiving grant funding is to clearly identify the nature of the award. Not all funding is treated the same.  

Equally important is setting up a system to track grant activity. Segregating grant funds within your accounting system helps ensure expenses are properly aligned with the funding source. Many grants come with specific restrictions or allowable cost guidelines, so having clear visibility into how funds are used reduces the risk of noncompliance. 

Documentation also plays a key role. Maintaining detailed records of expenditures, supporting invoices, and internal approvals will support both financial reporting and any future audit requirements. 

Understanding Single Audit Thresholds and Requirements 

Organizations that expend $1,000,000 or more in federal funding during a fiscal year may be subject to a Single Audit. This threshold is based on expenditures, not receipts, which can create confusion if funds are received in one period but spent in another. 

A Single Audit is separate from a financial statement audit, although both may be conducted around the same time. While a financial statement audit focuses on whether the financial statements are fairly presented, a Single Audit tests an organization’s compliance with federal requirements tied to federal grant awards. Because the process includes a review of internal controls and compliance requirements, organizations should begin preparing well before reaching the threshold. 

Proactive steps include identifying all sources of federal funding, reviewing grant agreements for compliance requirements, and assessing internal controls around grant management. Strong processes around procurement, reporting, and cost allocation can help reduce findings during an audit. 

Building Awareness Across the Organization 

Grant compliance is not limited to the finance team. Program managers, operations leaders, and administrative staff often play a role in how funds are used and documented. Clear communication and training can help ensure everyone understands the expectations tied to the funding. 

Organizations may also benefit from periodic internal reviews to confirm that spending aligns with grant requirements. These reviews can identify issues early and provide an opportunity to make adjustments before an audit occurs. 

Moving Forward with Confidence 

Grant funding can open doors, but it also introduces complexity. Taking time upfront to establish sound accounting practices and understand audit requirements can help organizations avoid surprises later. If your organization is navigating new or increased funding, a thoughtful approach today can support both compliance and long-term success.