Case Study on a Federal Award Recipient

Recently, we were engaged by a nonprofit organization to help them during a significant finance team staffing shift. In addition to replacing their CFO to complete their 4-person finance team, they were also in the middle of a very rigorous Single Audit and needed an outsourced CFO to step in and help get them through the transition.

What we found – The most urgent matters were overseeing the Single Audit, continuing to make timely federal draws, and submitting required reports based on accurate information. This is where we hit several roadblocks. The audit was delayed because the auditors found issues including expenses that should not have been directly charged, timesheets that were corrected on paper but not in the system, and grants that were overspent on budget line items. These same problems were clouding the organization’s ability to support their federal draws and as a consequence, they had cash flow problems. The uniting thread with these issues was the lack of clear and efficient systems.

First changes – Once we got through the audit, with several findings and material weaknesses, we improved the organization’s core accounting system. We switched them to an online accounting platform that gave necessary access to the program directors to detailed reports on their grant spending as compared to their most recently approved budgets. Before the switch to the online bill payment system, vendor bills were regularly changed to grants without the director’s approval and they would only find out about these changes if they asked for a detailed excel spreadsheet. After the transition, directors could drill down to expense line items to understand the individual transactions that made up the totals, and could use the reports to monitor spending as they reviewed and approved vendor bills. The initial result was that a lot of vendor bills were denied because they had not been approved in the budget. Finally, we migrated the organization’s excel spreadsheet timesheets to an online timekeeping system that tracked the hours each person had budgeted under each grant and how much time they had left after charging their time to the grant. This helped the directors monitor who charged the grant so they could plan to end the grant within their approved budget. These initial changes organized and clarified the flow of financial information. It gave access to the directors so they could properly manage the financial side of their government grants.

Organizing the flow of programmatic compliance – As we navigated the financial system transition, we noticed inefficiencies and roadblocks in programmatic compliance as well. The program directors and the executive director had a sense of this, but there was a lot of finger-pointing and critical project tasks were not being completed on time or at all. Our second step was to create programmatic systems and processes and expand policies and procedures to make sure everyone knew what needed to be done, the date by which it needed to be done, and who was responsible for doing it. With basic adjustments and comprehensive training, the organization was better able to meet project deadlines and complete project deliverables.

Training – The program directors play a very important role in ensuring that the organization is complying with the programmatic and financial requirements of each award. Once updated systems, policies, and procedures were developed, we crafted simple yet comprehensive training for program directors.They responded well to established order, a clearer sense of their responsibility, and consistent accountability. Once we set clear expectations, gave program directors the tools and support needed to meet those expectations, not only did the program directors deliver, they appreciated having more control over the entire process of the grants they were managing.

Running smoothly – These changes take time, particularly when you are dealing with initial fires to put out. After a year and a half, the systems were producing consistent results, budgets that were being met, not exceeded, reports sent in timely and accurately, and Single Audits that listed no findings or weaknesses. The program directors were better equipped to manage their grants and apply for new grants.

How we saved them money and gave them peace of mind – Initially, the financial team consisted of four staff, including the CFO. Within a few months of our engagement, the two finance team members left their positions. The staff accountant had been eager to get back to his real estate roots. The accounts payable and payroll clerk was much more interested in the community work that organization was engaged in and was moved to another position where she flourished. The accounting junior was ready to take on more responsibilities so she was trained in the more efficient online bill payment system, with time remaining to learn payroll and continue working with receipts and deposits. Our firm took over the comptroller and CFO work saving the organization 30% of the total finance department cost and adding the unforeseen benefit – their operations would no longer be disrupted by sudden changes in personnel. For any executive director who has had the unfortunate situation of finding qualified personnel to replace their finance team, that confidence can provide much needed peace of mind.

How can a specialized grants management team add value to your organization?

Hiring an expert team to establish structure, efficient systems, and processes will help you comply with government grant requirements and will add value to your organization in many ways:

  • This team focuses on government grant compliance and accounting issues – nothing else! You have a good finance team in your organization, but they have a very tight schedule with current daily, weekly and monthly deliverables. Winning a government award adds an extra layer to their responsibilities and can easily be pushed aside as having less priority, until they are forced to make it a priority. The newness and confusion of these new requirements can be time consuming and there will surely be a steep learning curve. Bringing a team dedicated to creating efficient systems and processes, and training your staff will get you off to the right start with fewer interruptions to your operations. And if you prefer, you can hire the team to take care of the entire compliance and accounting process, freeing up the current staff to contribute to the organization in ways that better align with their personal strengths.
  • Bring expertise from working with other clients. We’ve seen a few of the same issues with other clients, with other cognizant agencies and other grant managers. We can use our experience to guide you to the best approach when there are unique situations.
  • Outside and practical perspective with perhaps simpler solutions. Sometimes it takes a different set of eyes to look at a current process to suggest ways to improve it or to change it altogether to use the most modern technology and maximize its efficiency.
  • Improved grant monitor’s confidence. Your grant monitor will ask how you are proceeding to comply with the grant requirements, ask for reports, and plan visits to review systems and outputs. Having strong systems, producing clear reports, and interacting with a team who is very confident about the handling of grant funds will undoubtedly enhance your relationship with the grant monitor.
  • Open new possibilities for you to apply for more awards. Once you have a structure that works as expected, with tasks that need to be performed at set dates, and staff who knows when and what to complete, you can proceed confidently to add more government grants.
  • Cost savings opportunities. All of the factors above will result in cost savings to your organization. The time (including extra hours) that will require your team to do the research and create systems from scratch will be eliminated. Our expertise will help reduce costly errors. Our fresh perspective will improve the efficiency of your finance team. Your grant monitors will ask fewer questions, perhaps visit less frequently, and request less support if they have the confidence that you are handling the award properly. You will position your organization for steady and strong financial growth.

Expert teams, at the right time, can add great value to your organization and propel its growth!