Good Practice: Monitor and Acquit Grants

GOOD PRACTICE: MONITOR AND ACQUIT

• Monitor against all requirements set out in the funding agreement.
• Establish a standard of quality and performance that can be assessed objectively.
• Establish performance measures and benchmarks for each grants program and for individual grants, if appropriate.
• Use the model reporting and acquittal templates provided on this site to reduce the number of reporting regimes.
• Establish a policy to remove inconsistency between the level of accountability required and the level of funding being provided.
• Regularly review the effectiveness of monitoring activities, including data collection and information sharing within and between agencies.

Guidelines and Resources

Definition and purpose

In the context of grants administration, monitoring is the process of collecting, recording and analysing information on a regular basis throughout the life of a grant and a grants program.

The Government needs to collect information from grants recipients to establish that funds are being spent correctly and to measure the results or performance of its spending against the objectives of grants programs.

Factors that inform the way grants are monitored in NSW

Grants administration occurs within the legal and regulatory framework in which the NSW Government operates. A range of legal and regulatory requirements also informs the operations of funded non-government organisations and local government councils.

Follow the link to a chart of Financial Reporting by Nonprofit Organisation.

Agencies should be aware that organisations that receive funding from multiple sources are often required to meet multiple accountability requirements, each with different reporting periods, vocabulary, formats and measurements. This can be in addition to other legislative financial reporting obligations. In smaller organisations this effort can impact significantly on the resources of the organisation.

Some grants programs that fund the delivery of services to the community are managed by the NSW Government but the source of money is the Commonwealth Government. Reporting requirements for Commonwealth funded programs often have additional monitoring requirements such as collecting data for the Australian Productivity Commission.

Types of monitoring

Collecting and recording information most often takes place through written progress and/or final reports and through financial statements but can also take place through telephone discussions and site visits which are recorded in a file note.

To establish an appropriate level of monitoring agencies should take into account:

• the amount of funding, the nature of the funding program and the nature of the funded organisation. For example funds provided for one-off projects may only require a simple statement of acquittal, whereas funds provide on a recurrent basis for the delivery of services will require more rigorous monitoring to ensure the continuity of the service.
• the administrative cost of monitoring, reporting and data collection both to the agency and the funded organisation.
• the agency's risk management policy.

Data collection should:

• comprise only what is necessary and not what is merely desirable.
• be well defined and collected and presented in a form that is clear and easy to understand and interpret.
• be coordinated across agency cluster groups to reduce duplication of effort both for the agency and grants recipients.

Performance monitoring

Performance monitoring of activities funded by the Government grants programs should collectively answer the questions:

• What has been done?
• How well was it done?
• Is anyone better off?

Information to answer these questions should be collected against a set of performance measures which:

• are clear and easy to understand and use.
• assist decision makers and funded organisations to understand program performance requirements and inform performance improvement.
• are connected and integrated with an agency's other planning, budgeting and management systems.
• can be adapted to reflect changes in program requirements and policies.
• focus on outputs and outcomes rather than relying almost exclusively on input and process measures.

Follow this link to the Model Performance Report.

Model process templates can be customised and used according to this basic guide to Using Model Forms.

Site visits
In addition to written reports, performance monitoring may involve a meeting between the funding agency representative and the recipient at the site where project management or service delivery occurs. Such a visit provides the opportunity to:

• observe evidence of progress or achievement of agreed goals
• inform discussion about emerging issues, opportunities for improvement and barriers to progress
• inspect project and program records
• attend a management or board meeting.

The inclusion of site visits their nature and frequency, should be agreed between the funding agency and the recipient organisation in accordance with privacy and confidentiality arrangements and clearly stated in the funding agreement.

Financial monitoring

Two broad objectives should guide financial monitoring:

1. Funds should be used in an efficient, effective and appropriate manner, consistent with Government priorities and community needs; and
2. Funds should be properly accounted for with adequate safeguards in place to prevent misuse.

Determining the type and level of monitoring required

For small one-off projects, a report on achievements against objectives and financial acquittal when the project is completed would generally be sufficient.

For more complex projects and service delivery programs, regular and rigorous review is required to determine progress and assess whether value for money has been achieved. This will include regular progress reports by the funding recipient against agreed performance measures or milestones and/or site visits by a representative of the funding agency.

A regular review of monitoring, reporting and evaluation activities for funding programs should be scheduled in the funding agency's internal audit plan.

Model templates for performance and financial monitoring

Templates have been designed to capture information relating to different aspects and levels of financial and performance reporting. The templates can be adapted for both interim and final reports and include a basic performance report, acquittal certificate, balance sheet, income And expenditure statement, application for surplus funding retention, and an asset register.

Select any of the following to download a model monitoring template:

• Model Performance Report
• Model Acquittal Certificate
• Model Balance Sheet
• Model Income and Expenditure Statement
• Model Asset Register

Model process templates in Word can be customised and used electronically according to this basic guide to Using Model Forms.

The model balance sheet template and the model income and expenditure statement template are provided in Excel spreadsheet format with embeded formulas and capacity to monitor against the full range of financial elements. Not every grant will require this extent of financial monitoring. Grants managers should customise the templates to only include the necessary elements to determine expenditure against the funding agreement.

Unspent funds

Unless there is an agreement with the funding agency a recipient is required to pay back unspent funds at the completion of the funding period. There may be occasions when the funding recipient wishes to present a case to retain unspent funds and agencies should properly consider any proposal. Follow this link to the model template Model Unspent Funding Retention Form.

Financial management

All funding recipients should be required to maintain an interest bearing account at an approved financial institution (i.e. bank, building society or credit union with 100% security of deposits) for all transactions relating to the funding received. Unless require by legislation, it is not necessary for separate accounts to be opened in respect of each funding source. Rather, the funds should be deposited in an approved form to ensure protection and accountability.

Good financial management practice indicates that the recipient should advise the funding agency in the following circumstances:

• where a project or service will not commence within 3 months of receiving the funding; and/or
• where the project or service has been inactive for a period of 3 months or more.

Keeping records and accounts during the funding period
With limited exceptions, organisations receiving NSW Government funding must be incorporated in Australia. The recipient organisation is required to maintain adequate
financial and operational records in relation to the operation of the project or service in accordance with the arrangements specified under incorporation or other relevant legislation.

The type of accounting records required to be held will vary according to the funding program but the following list is provided as a guide.

• Cash Book
• Bank Deposit Book
• Cheque Butts
• Petty Cash Book (kept on imprest system)
• Pre-numbered Official Receipt Book
• Monthly Bank Reconciliation of Cash Book
• Documentation of all Expenditure with evidence of approval (eg. Management Committee or Officers as authorised under the organisation's approved constitution)
• Wages Records/Time Sheets (where staff are employed)

The above records may be encompassed in an adequate computerised accounting system.

The type of financial records required to be held will vary according to the funding program but the following list is provided as a guide:

• Balance Sheet
• Profit And Loss Statement or Receipts and Payments
• Cash Flow Statement
• Assets/Inventory Register

Goods and Services Tax

Applicant organisations are required to provide their Australian Business Number ABN and their GST status. It is recommended that the funding agency checks the validity of each applicant organisation's ABN and GST registration on the Australian Taxation Office's website. Follow this link to the Australian Government's ABN Lookup website.