Grant Reporting and Record Keeping

Most disputes between funders and recipients begin with a report rather than with money. The obligations usually outlive the project, and frequently outlive the person who was doing them.

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Reporting and record-retention obligations normally continue after the funded work is finished, and audit rights commonly survive the end of the agreement for the whole retention period.

Who does this work. Lexaltico LLP’s government funding and grants service is led by Mitch Parmasar, who is not a lawyer and does not provide legal advice. Where a matter calls for legal advice — a funding agreement, a governance question, a repayment demand — it is handled by a lawyer at Lexaltico LLP. The firm is responsible for all of the work described on this page.

Quick Answer

What are our reporting obligations on a grant?

Whatever the funding agreement says, and it will be specific about form, content and dates. Typically there are interim and final reports on a fixed schedule, financial reporting against the approved budget, an obligation to keep supporting documents for a stated period after the project ends, and an obligation to notify the funder of changes. Audit rights normally survive the end of the agreement for as long as the records must be kept. Late or missing reports are the single most common starting point for a funder demanding money back.

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WHAT IS REQUIRED

The Schedule Is in the Agreement, and It Is Specific

Reporting requirements are set out in the funding agreement and are usually precise as to form, content and date. There will commonly be interim reports, a final report, and financial reporting that has to reconcile to the approved budget rather than to the organisation’s own accounts.

A report that arrives on time but does not match the budget is a problem of the same family as one that does not arrive. What the funder is testing is whether the money was spent on what was approved, and a reconciliation the organisation cannot produce reads as expenditure it cannot substantiate.

RECORDS

Keep Them Longer Than the Project Lasts

Record-keeping clauses generally require supporting documentation to be retained for a stated period after the end of the funded work, and to be produced on request. That period routinely outlasts the staff who ran the project and sometimes the systems the records were kept in.

The consequence of being unable to substantiate expenditure is usually that the funder treats it as ineligible. Not disputed, not investigated — ineligible, and therefore repayable. Records are the whole of the defence.

THE FILE

What Should Be in It, From Day One

One file, opened when the grant is awarded: the application as submitted, the agreement as signed, every approved variation, the invoices and receipts, proof of payment, each report as filed, and the correspondence with the funder.

That file is what turns an audit into an afternoon. Assembling it at the point an auditor asks, from three people’s inboxes and a shared drive, is where the cost and the exposure both come from.

AUDITS

They Arrive After the Project Has Finished

Audit rights typically survive termination and continue for the retention period, so an audit landing a year or two after a project closed is ordinary rather than exceptional. Some agreements give access to records relating to the funded project; some are drafted more broadly and reach the organisation’s books generally.

Which of those you agreed to is worth knowing before the letter arrives, particularly for an organisation with several funders or with commercially sensitive information in its accounts.

CHANGES

Get the Variation in Writing at the Time

Projects change. The agreement will say what may change without permission and what needs the funder’s approval, and an unapproved change is one of the commonest routes to a repayment demand.

The failure is rarely deliberate. A programme officer says on a call that moving money between two budget lines is fine, everybody proceeds sensibly, and eighteen months later nobody can produce anything showing it was agreed. A short email confirming what was said, kept on the file, costs nothing at the time and is close to impossible to recreate afterwards.

IF YOU HAVE MISSED ONE

Raise It Rather Than Wait to Be Asked

A missed reporting deadline is a common and usually recoverable problem, and it gets worse with silence. Funders deal with late reports routinely; what they deal with badly is discovering a pattern of them after the fact.

Where a demand has already been made, there is normally more to say than an organisation expects: whether the expenditure was in fact eligible, whether a variation was agreed in correspondence even if never formally documented, whether the reporting failure has been cured, and whether the amount claimed is right. That is legal work and is better started early, while the file is still assembled and people still remember.

HOW WE WORK

What Lexaltico Does on a Reporting Problem

Two instructions are common. One is preventive: read the agreement, say plainly what has to be reported, when, and what must be kept, so the organisation can put it in a diary. That is the cheap version.

The other is a letter from a funder about a report that did not arrive or figures that do not reconcile. Reading the agreement and the correspondence and settling what actually happened is handled by a lawyer at Lexaltico LLP; the funding advisory side is led by Mitch Parmasar, who is not a lawyer. Fees are quoted and agreed in writing before work begins.

Common Questions

Frequently Asked Questions

What are our reporting obligations on a grant?

Whatever the agreement specifies, usually interim and final reports on fixed dates plus financial reporting that reconciles to the approved budget, with records kept for a stated period afterwards.

How long must we keep the records?

For the period the agreement states, which typically runs for years after the project ends. Audit rights normally last as long as the retention obligation.

What happens if we cannot find the receipts?

Expenditure that cannot be substantiated is generally treated as ineligible and therefore repayable, regardless of whether it was genuinely incurred.

Can a funder audit us after the project is over?

Commonly yes. Audit rights usually survive the end of the agreement for the retention period, so an audit a year or two later is routine.

Do we need permission to change the project?

Usually for anything the agreement says needs approval. Get the variation confirmed in writing at the time; reconstructing a verbal agreement at audit rarely works.

We have missed a reporting deadline. What should we do?

Raise it with the funder rather than wait. Late reports are handled routinely; a pattern discovered afterwards is handled much less well.

The funder says we spent money on something ineligible. Is that the end of it?

No. Whether the expenditure was in fact within the categories, whether a change was agreed, and whether the amount claimed is correct are all answerable, and better answered early.

What should the grant file contain?

The application, the signed agreement, every approved variation, invoices, receipts, proof of payment, each report as filed, and the funder correspondence — one file, from the award.

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Is there an application or response deadline? optionalMost funding programmes close on a fixed date and do not reopen, so tell us any date you have.

Which programme, if you know it? optionalFor example SR&ED, IRAP, CSJ, or an Ontario or municipal grant.

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