When an organization receives federal funds, it is responsible for using those funds in accordance with laws and regulations. The recipient must use fiscal control and accounting procedures to ensure the proper disbursement of and accounting for these funds. The effective management of public funds should be a result of ongoing activities that ensure audit readiness, such as:

• Administrative controls--the plan of organization and procedures and records related to authorizing transactions.
• Accounting controls--the plan of organization and procedures and records concerned with assets and reliable financial records
• Compliance with Federal requirements--examples: charges for direct labor; reporting of financial status; treatment of grant-related income; eligibility of participants; monitoring of activities; allowability of services
• Records--should include information adequate to support statements in the application document; should be retained for required period of time
• Internal audits--may be requested by the grant recipient to help determine whether controls are adequate

Each agency publishes its guidelines for the proper management of funds--including allowable and unallowable costs. The following policy manuals are available in the Grants Development Office or through the Web pages of the agencies:

• National Science Foundation, Grants Policy Manual
• U.S. Department of Health and Human Services, Public Health Service, PHS Grants, Policy Statement
• U.S. Department of Education, Education Division General Administrative Regulations (EDGAR)