News & Insights

Grants are a critical funding source for local governments, supporting everything from infrastructure improvements to public safety initiatives and community development. However, securing grant funding is only the first step.   

Effective grant management, from application through closeout, is essential to maintain compliance, safeguard public funds, and position governments for future awards.  

Based on our experience working with municipalities and other local governmental entities, the following three considerations are foundational to successful grant management. 

1. Understand the Original Funding Source and Compliance Requirements 

One of the most important and often misunderstood aspects of grant management is identifying the true funding source of a grant at the time of application. For local governments, this means determining whether a grant is state-funded or federally funded, regardless of which agency disburses the funds.  

A common point of confusion arises when grants are passed through state departments. Even though the funds may come from a state agency, they may still be federal in origin. This distinction is critical because grants funded with federal dollars are typically subject to the Uniform Guidance and the Single Audit Act, as well as other federal compliance requirements.  

How to Review Grant Information 

Grant agreements and supporting documentation should be carefully reviewed to identify the original source of the funds and any compliance obligations associated with the award. Additional clarity can often be obtained by consulting state department websites, reviewing frequently asked questions, or communicating directly with grant administrators.  

Because this determination can be complex, local governments should maintain a centralized grant filing system. This system should include:  

• Grant agreements and amendments  
• Application materials  
• Funding research  
• Award notifications  
• Correspondence with granting agencies  
• Compliance guidance  

A well-organized grant repository strengthens internal controls, supports daily administration, and ensures documentation is readily available for audits, monitoring visits, and financial reporting. 

2. Track Grants Effectively Within the Accounting System 

The second cornerstone of sound grant management is proper grant tracking within the accounting system. Most grants awarded to local governments are restricted funds, meaning expenditures must align with the specific purpose and time period outlined in the grant agreement.  

Many grants are expense-driven and only allow revenue recognition to the extent that allowable costs have been incurred during a given period. Without precise tracking, governments risk inaccurate financial reporting or noncompliance with grant requirements.  

Best Practices for Grant Fund Management

One of the best approaches is to assign each grant a unique identifier, such as a grant number or project code, within the accounting structure. This allows revenues and expenditures to be tracked separately while still integrating with the government’s overall financial system. It also allows reporting for individual grants, so activity can be reviewed by funding source and period.  

Effective grant tracking supports accurate reimbursement requests, budget monitoring, audit readiness, and timely financial reporting.  

3. Maintain Required Federal Grant Policies and Procedures

Finally, local governments receiving federal grant funding should ensure they have appropriate written federal grant policies and procedures in place. These policies are not only required for entities subject to a Single Audit but are also often a condition for receiving federal awards of any kind.  

How to Stay Compliant with Federal Funding

Common policy areas include procurement standards, allowable costs, subrecipient monitoring, and internal controls. Audit findings frequently stem from the absence of documented policies rather than misuse of funds. Best practice is to maintain written policies that address all compliance areas included in the Compliance Supplement.  

Strong policies and procedures promote consistency, support compliance, and demonstrate responsible stewardship of public funds. They also position local governments for successful audits and future funding opportunities.  

Need Assistance with Grant Management? Maner Can Help  

Grant requirements continue to evolve, and managing them effectively can place significant demands on local government staff. If your organization needs assistance with grant compliance, accounting, policies and procedures, or audit readiness, we are here to help.  

Contact us today or email maner@manercpa.com to learn how we can support your grant management efforts and help ensure your programs remain compliant, efficient, and well-positioned for continued funding.