New Practice Guide: Auditing Grants in the Public Sector

Public sector organizations are pressured to outsource more of the delivery of public services, and grants are one of the mechanisms available to accomplish this goal. At the global level, this is a high-stakes undertaking. Billions, perhaps trillions, of dollars are funneled every year into grant programs globally to provide basic goods and services that are driven by community needs or mandated by legislation or regulation.

The provision of public services through third parties inherently increases risk and liability, and in the case of grants, the potential for corruption, fraud, waste, and abuse is abundant. Much behindthe-scenes work must be done throughout the grant’s life cycle by both the grantor and the grantee to ensure that aid reaches the intended beneficiaries.

Internal auditors in the public sector can add great value in the area of grant administration and management in terms of providing assurance that aid is being deployed and used in accordance with rules, regulations, and restrictions, as stipulated by the grantor or any legal or jurisdictional requirements that govern grantors or grantees. Internal audit’s involvement may be through proactive evaluations (consulting services) to offer insight and help anticipate future impacts or assessments of processes’ efficiency and effectiveness of controls.

This practice guide offers insights from the grantor and the grantee perspectives and tools for auditing grants. Topics include:

• The life cycle of a grant with activities occurring within each phase.
• Administration and management processes for grantors and grantees.
• Planning engagements to assess grants.
• Risk and control matrix examples.
• A review of activities for internal auditors.
• Considerations to improve grant administration and management.

Download Practice Guide: Auditing Grants in the Public Sector