Business grants are a great way for businesses to get the finances they need to realise a fresh idea or new development plan, all the while boosting their visibility among investors and clients.
They can be time-consuming, however, and usually come full to the brim with terms and conditions.
So, if you’re thinking about applying for a business grant for the first time, such as an innovative UK smart grant, British council grant or green business grant, you’ll need to be aware of the possibility of having to organise an audit grant.
What is a grant audit?
An audit grant is usually carried out partway or towards the end of the grant period, done to ensure that the grant funds are being used as you and the funding body agreed they would be.
It involves an auditor checking records including:
- allowable costs and legitimacy of an expense purchased with grant money
- programme income generated by the grant and programme performance
- cash management.
Grant audits are not always necessary and will only be required if the funder requests one. Government bodies tend to request one as part of their funding programmes, however.
They are typically carried out in a format specified by the funder, with the audit and final report preparation carried out by a registered auditor.
Getting grant audits right
If you’re required to complete a grant audit to get your external funding, one of the most important things to do is appoint an auditor at the acceptance stage of the grant. Don’t leave it too late.
This way, your auditor will understand your project better, giving them a better opportunity to conduct a more cost-efficient and time-efficient grant audit.
You’ll have to organise the auditor yourself and cover any fees. You should be able to apply to the grant-awarding body to retrospectively cover the cost of the audit, or it may be included within the funding award, so you don’t need to worry too much about the cost.
If the award letter and associated grant conditions does not include funding to cover the audit, you should still fulfil your audit obligations, though. After all, if you don’t get an auditor in, the funder might respond by clawing back some of the funds they issued at a later date.
What you can do to get ready
It’s about more than bringing an auditor in and wiping your hands of responsibility.
The most successful audits will be done for organisations that apply an audit-focused grant management strategy from day one of the grant.
This starts with keeping detailed documentation of information including:
- project timelines and milestones
- programme income and budgets
- report of funds spent
- financial expenditures and budget narratives.
Running regular internal reports throughout the lifecycle of the grant to ensure data accuracy and performance is ideal too.
Our audit team can help you prepare for a grant audit and give you the assurance your business needs that it will benefit from grants to the full amount.
Talk to us about grant audits.