Nearly everyone applying for a grant has to undergo the tedious process of creating a detailed budget and follow grant accounting standards. This is the first step in the process and the budget has to be within reasonable limits of your spending reports when the grant is finalized.
Grant Budgeting Requirements
When a grant application is submitted, it must be detailed as much as possible. This allows the group reviewing the grant for approval to guarantee that the grant falls within their basic requirements. While there may be some flexibility on how the funds are spent, for the most part you may be required to stick faithfully to the budget that was submitted with your initial grant application.
Here are some tips for meeting basic grant accounting standards:
- Always start with a copy of the budget that was submitted with the grant so you know about the cost categories.
- Provide all parties involved in fund spending each cost category. This will help you when writing your final grant report.
- Stress to all parties that receipts are required in order to be reimbursed. Grant accounting standards dictate that all receipts are made part of the final grant report.
- Always record expenses and expenditures as they are provided. Keep a log of all receipts so they are not misplaced.
These simple processes will provide you the necessary documentation and information you need to file your final report. If an item goes over budget, make sure you advise the parties involved which expense categories are over budget. Breakdowns can easily be created using "T" Accounts for keeping the proper records.
Budget Versus Actual Expenditures
It is very rare that your actual grant expenditures will exactly equal your spending. In this case, the solution is to properly record all expenditures in the correct category and show the deficit in each category if one occurs. For example, if your grant covered an expense for a microscope at $800 and the price increased to $850 before the purchase date, you will be over the budgeted amount. If you are able to cut expenses from another category (depending on the terms of the grant) you can use funds from other areas to cover the shortfall, or you can request funds from alternative sources. This type of shortfall should be recorded on the final grant paperwork. For example, your final grant paperwork would show a table that included your budget and expenses. It may look like this:
- Budgeted $500
- Actual $350
- Budgeted $800
- Actual $850 (used $50 from administrative for shortfall)
- Budgeted $100
- Actual $200 (used $200 from admin for shortfall)
This does not excuse you from detailing the other expenses, it merely allows you to record the shortfall and how they were covered.
Each grant application will have specific standards for reporting that must be used. You can quickly and easily set up the budget along with a cash flow statement that will allow you to track all expenses and make sure you remain in compliance with the grant reporting request. Grant accounting standards vary slightly from grant to grant, but the overall idea is to report accurately all funds that are spent.