Receiving a grant is only the beginning. Every grant program requires that you track how funds are spent, maintain records, and demonstrate that money was used for its approved purpose. Failure to properly track spending can result in repayment demands, audit findings, and disqualification from future programs.
Basic Record-Keeping Requirements
- Separate bank account: Many programs require or recommend a dedicated bank account for grant funds
- Receipts and invoices: Keep every receipt, invoice, and payment record associated with grant-funded activities
- Time records: If personnel costs are grant-funded, maintain detailed time and effort records
- Procurement records: Document the bidding or selection process for vendors and contractors
- Retention period: Keep records for at least three years after the grant closes, or longer if required by the specific program
Accounting Best Practices
- Set up grant-specific accounts: Create separate accounts or cost centers in your accounting system for each grant
- Track by budget category: Match spending to the approved budget categories
- Reconcile monthly: Compare your records to bank statements monthly
- Track matching funds separately: If cost-sharing is required, track your matching contributions with the same rigor as grant funds
- Document deviations: If spending differs from the approved budget, document why and request budget modifications if required
Reporting Requirements
Most grant programs require periodic financial and progress reports. Common reporting schedules include:
- Quarterly financial reports showing spending by category
- Progress reports describing activities and outcomes
- Final reports summarizing the entire project
- Annual reports for multi-year grants
Detailed grant reporting guide.
Audit Preparation
Grant recipients may be subject to audits. Federal grants over $750,000 require a Single Audit under 2 CFR 200. State programs have their own audit requirements. Keep your records organized and accessible at all times.
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