For non-profit organizations, funding reports were never a fun part of the job. But for years, they were relatively safe. In the last few years, though, your organization's funding reports could actually put you in danger of being audited.
In 2014, the Digital Accountability and Transparency Act (DATA) changed time-and-effort reporting for government grants. Soon after that, private sources followed suit. No longer could you simply estimate your time percentages to account for grant funding. Now you're expected to give exact numbers, for every person on the grant.
If your funding report looks like you're supplying estimates instead of actual numbers, you could be raising red flags without knowing it. And those red flags can get you audited.
If you get audited, you’ll have to substantiate the information you supplied. If you don’t have the data to back it up, you’ll fail the audit and will probably lose the grant. If other funding sources find out about the failed audit, you could lose those grants as well.
Improper funding reports put your entire organization, and its mission, at risk. But you can avoid being audited by following time reporting best practices. Let's look at the most critical practices to avoid unplanned audits.
Automate Your Time Capture
The number one thing you can do to avoid getting flagged is to capture everyone's actual time accurately, and immediately. It should also be automated as much as possible, because human error will creep in—whether it's forgetting to record your hours, breaking a spreadsheet macro or fat-fingering your entries.
That means you should ditch paper timesheets and spreadsheets. Instead, you need a system that can automatically and consistently capture time spent on both grant and non-grant activities. This gives you an audit trail and a structured process to reliably capture your employee’s time information.
An automated time capture system like this gives you actual numbers that the grants can be tracked against—without the risk of human error. It also protects data from being accidentally deleted, overwritten or misplaced. Spreadsheets and paper timecards don’t offer that kind of reliability.
Use a Robust Process
Your time capture system will only be as effective as your internal processes and policies. If you're lackadaisical about time capture methods or deadlines for submission, you'll subvert your own attempts to report accurate numbers. If you don’t have a process that ensures you get good data on the front end, your reports will be inaccurate on the back end.
For some non-profits, that means biting the bullet and making some purposeful culture changes. If your organization has always valued a relaxed atmosphere and independent working habits, your employees might resist a standardized process that is suddenly placed upon them. You'll need to be strategic about any changes you make.
Establish a process that only allows employees to use the automated system, and to charge their time to grant and non-grant activities throughout the week. You'll also need to ensure employees are timely with their reporting. If hours are entered three weeks after the fact, your reporting numbers will be off. You can configure most time-and-attendance systems to flag anyone who hasn't entered their hours on-time.
Allocate Earnings Proportionately
You're accurately capturing everyone's hours for grant and non-grant work, and it's coming in on-time. But you still need to allocate each employee's pay in proportion to time spent on grants. Your funding sources expect an accurate breakdown of what was spent on each grant. That can be especially tricky if you have employees working on multiple grants, especially with paid time off and overtime.
You can do those calculations manually, with spreadsheets, or through an automated system. Because most time-and-attendance systems can’t do those calculations, non-profits are turning to GrantAlytics.
GrantAlytics is a grant management solution for non-profits. The fully-automated system uses detailed dashboards to give you precise information about how each grant is performing—and why. You’ll see actual data based on information extracted from your time system, not estimates.
Using GrantAlytics—in conjunction with an automated time-and-attendance system and robust policies—gives you the solid foundation you need to provide accurate funding reports and avoid unplanned audits. Better still, the automated system eliminates countless hours, reducing grant spend and freeing you up for more important work.
Check out this quick video to discover how GrantAlytics can help you avoid audit red flags.