Grantee News, Spring 2013
Issue 1, Volume 1
Knock, Knock, We’re Here!
Occasionally, the NED Compliance Staff will travel to a grantee’s offices to test the organization’s internal controls and accounting systems, and make sure the grantee is keeping close track of costs charged to NED grants. We call this an onsite review. In the past two years, Compliance staff conducted 64 onsite reviews. We found that there were six things grantees did incorrectly that could easily be fixed if we just let you know how.
1. Not Marking Invoices with “NED” or “Paid”
Finding: Some grantees with multiple donors did not identify NED invoices as separate from other donor costs. And some forgot to identify their paid invoices.
Recommendation: Mark your NED invoices with “NED.” That way, when you’re going through your invoices to post costs to your accounting system, you will be able to see NED costs easily. When you’ve paid your invoice, stamp it “Paid” to avoid duplicate payments. To make things easier for you, NED has created a “NED” stamp. If you don’t already have one, request your very own “NED” stamp from Compliance Manager Chibuzo Ogbonna at Chibuzoo@ned.org.
2. No Bank Reconciliations
Finding: Many grantees did not compare their accounting system to their bank statement to make sure they were equal, or reconcile their accounts. Organizations need to be sure that the cash balance in their accounting system equals the cash balance in their bank account—or things could get awkward when it’s time to pay the bills.
Recommendation: Do a monthly bank reconciliation. Any differences between items in the transaction register or cash ledger and the monthly bank statement should only be from outstanding checks, bank fees, or deposits that haven’t yet been posted to the account. After you finish, print the reconciliation, have an authorizing person sign it, and file it where you can find it.
3. Confusing Invoice Filing Systems
Finding: Sometimes NED staff can’t find invoices during an onsite reviews because they are not filed properly.
Recommendation: Please file your invoices by quarter and by budget category. For example, group all your supplies and equipment invoices for the month and file them by date, beginning with the earliest date. This will make your onsite reviews go smoothly and make it easier for you to prepare financial reports.
4. No Documented Accounting Policies
Finding: Some grantees didn’t put their accounting policies and procedures in writing. This led to staff making mistakes. And it made auditors unsure about the quality of the organization’s management.
Recommendation: Write down your organization’s accounting policies and procedures so your organization’s staff have a clear description of the steps to follow for each accounting process. That way each staff member, even new ones, will be able to follow the same process. When an organization writes down or documents its accounting policies and procedures, it shows auditors that it is a mature and well-managed organization.
5. Grantee is Not Familiar with the NED Grant Agreement
Finding: Although the NED grant agreement is the document that explains to grantees what they are required to do to manage their NED grant, often grantees don’t know what is in the document.
Recommendation: Read your NED grant agreement. If you don’t understand something in it, ask your Grants Administrator or Program Officer. It’s important to understand what is in the NED grant agreement because it is a legal contract between your organization and NED. It states the amount of the grant, its duration, the project description, and the budget. The grant agreement also includes Grant Provisions which govern everything from your accounting system to how long you must maintain NED documents.
6. No Employee Timesheets
Finding: Most grantees do not maintain timesheets for employees working on NED projects. Without timesheets an organization will be required to reimburse NED for money paid for salaries!
Recommendation: Every recipient of a NED grant must maintain a timesheet for each salaried employee working on the project. Timesheets should show the number of hours worked and should be signed and dated by both the employee and the supervisor.
Sometimes a NED audit will find “unallowable” costs in a grantee’s expenses. What are they? They are costs that grantees cannot pay for with NED funds, per the NED grant agreement.
The following costs cannot be charged to a NED grant:
- Alcohol – any alcoholic beverage includingbeer, wine, and liquor.
- Fines and penalties – parking tickets, tax penalties, late payments, and other violations of U.S. local, state, or national laws or regulations.
- Entertainment – social activities, amusements, tickets to museums, movies, shows or sports events.
- Lobbying – attempts to influence officials at any level of U.S. government.
- Donations and contributions – cash, property, or services given to any person or organization.
- Organization costs – incorporation fees, fees to promoters, organizers, attorneys, or management consultants, to establish or reorganize an organization, unless you receive approval from NED beforehand.
Tip Corner: Invoices
Keep your invoices and receipts well organized and easy to find by following this 1-2-3 rule:
1. File them by quarter
2. In the quarter, file them by budget category:
- Space & Utilities
3. In each budget category, file them by date
Now you can easily find them during an audit and when you are preparing your financial reports to NED.
Meet the Team: Compliance at NED
The Compliance Team at NED. Back row, left to right: Java Dorjsuren, Senior Auditor; Chibuzo Ogbonna, Manager; Svetlana Sukovatitsyn, Audit Associate; Nina Crawford, Auditor; Keith Burton, Senior Director; Adel Mawla, Senior Auditor. Front row, left to right: Sylvia Vest, Senior Auditor; Karell Camara, Auditor; Donna de Guzman, Auditor; Elena Bernstein, Senior Auditor.
To help grantees understand NED policies, Compliance sends the following to each grantee:
- Internal Control Recommendations – based on our review of your Financial Questionnaire, the document helps you correct internal control weaknesses and strengthen your accounting system.
- Introductory Letter – explains the supporting documentation your organization must maintain for each budget category (salaries, supplies and equipment, etc.).
- Financial and Administrative Guidelines – includes guidance, worksheets, and forms that will help you comply with NED financial requirements.
- Cash Management Procedures – guidance, worksheets, and forms to use if your organization uses cash to make most of your payments for NED grants.
The stronger you are financially, the easier it will be for you to focus on your program and attract other donors. And we want to help!
Mission: Compliance at NED
The Compliance Department at the National Endowment for Democracy is dedicated to helping NED grantees learn how to correctly account for grant funds. As part of the Grantmaking Program at NED, Compliance works with the Regional Program and Grants staff to assess each grant’s risk to the NED before it is issued, and to monitor each grant accordingly.
Each NED grantee is monitored by a team of NED staff that includes Regional Program, Grants, and Compliance staff, and receives communications and assistance from various members of the team during the life of the grant. Our mission is to help you.