The email arrives with a polite subject line: the funder would like to schedule a review, or your auditor is sending the document request list. Suddenly you're hunting for a timesheet from fourteen months ago and wondering whether last spring's drawdown matches the ledger.
Audits feel less frightening when you know what's coming. This post covers the types of audits and reviews a grantee can face, what auditors typically ask for and a week-by-week checklist to get ready.
This is general information. Your auditor, the funder and your award terms are the authorities for your situation, so check with them on specifics.
The audits and reviews you might face
"Audit" covers several different things. Knowing which one you're facing tells you who's asking, what they care about and how deep they'll go.
| Type | Who does it | What it usually looks at |
|---|---|---|
| Desk review | Funder or pass-through entity staff | Documents you send: reports, ledgers, policies, sample invoices |
| Program monitoring or site visit | Program officer or monitoring staff | Whether activities, outcomes and records match the approved plan |
| Financial statement audit | Your independent auditor | Your organization's overall financial statements |
| Single Audit | Your independent auditor | Financial statements plus compliance and internal controls for major federal programs |
| Inspector General audit | The federal agency's Office of Inspector General (OIG) | Specific awards, programs or concerns, sometimes in depth |
Desk reviews and monitoring are routine for many awards. Federal agencies and pass-through entities review reports and records as part of normal oversight. If you're a subrecipient, the Uniform Guidance requires the pass-through entity to monitor your activities, which includes reviewing your financial and performance reports (2 CFR 200.332).
The Single Audit applies when a recipient or subrecipient expends $1,000,000 or more in federal awards during its fiscal year (2 CFR 200.501). Auditors use the Office of Management and Budget (OMB) Compliance Supplement to know what to test for each program. We'll cover the Single Audit in depth in a dedicated post.
Inspector General audits are less common and often more focused. The Uniform Guidance gives the funding agency, the pass-through entity, Inspectors General and the Comptroller General a right of access to records pertinent to the award, and to your staff for interviews (2 CFR 200.337).
What auditors ask for
Most auditors send a "prepared by client" list (often called a PBC list). It names the documents and schedules they want, usually with due dates. The details vary, but these items show up often:
- The award documents: notice of award, approved budget, terms and conditions, any amendments and prior approvals.
- The general ledger for each award, with transactions coded to the right grant and cost category.
- A schedule of federal expenditures by award (for a Single Audit, the auditee must prepare the schedule of expenditures of federal awards).
- Drawdown and payment records from the federal payment system or pass-through entity.
- Payroll support: timesheets or other records showing how staff time was charged.
- Sample transactions: invoices, receipts, purchase orders, contracts and proof of payment for selected expenses.
- Procurement files: quotes, bids, selection documentation and contracts for purchases charged to the award.
- Written policies: financial management, procurement, travel, cost allowability and cash management procedures.
- Subrecipient files, if you pass funds through: risk assessments, subaward agreements and monitoring records.
The Uniform Guidance expects your financial management system to support exactly this kind of review. It calls for records that identify the source and use of federal funds, supported by source documentation, and written procedures for payment and for determining cost allowability (2 CFR 200.302).
Organize source documents so anyone can follow them
An auditor should be able to pick any transaction in your ledger and find its support in minutes. Here's a structure that works for many small teams:
- One folder per award, named with the award number and funder.
- Subfolders by category: award documents, budget and approvals, ledger and reconciliations, drawdowns, payroll, procurement, subrecipients, reports, correspondence.
- Consistent file names that include the date, vendor or payee and amount. For example:
2026-03-14_CityPrint_1240.00.pdf. - A short index at the top of each award folder listing what's where and who to ask.
Keep records for as long as the rules require. Under the Uniform Guidance, the general rule is three years from the date you submit the final financial report, with longer periods in some cases, such as unresolved audit findings or litigation (2 CFR 200.334). Your award terms or state law may require more.
Reconcile drawdowns to the general ledger
One of the first things an auditor will check is whether the cash you requested matches the costs you recorded.
For each award, build a simple reconciliation:
- Total drawn or reimbursed to date, from the payment system or pass-through entity.
- Total expenditures charged to the award in your general ledger.
- The difference, with an explanation for every dollar.
Differences from timing or accruals aren't automatically problems. What matters is that you can explain them.
Watch especially for cash on hand. For recipients other than states, advance payments must be limited to the minimum amounts needed and timed to actual, immediate cash needs (2 CFR 200.305). If you drew funds well ahead of spending them, document why and what you've done since.
Check allowability before the auditor does
Pull a sample of your own transactions and test them the way an auditor would. Under 2 CFR 200.403, costs generally must be necessary and reasonable for the award, allocable to it, consistent with your policies, treated consistently, in line with any limits in the cost principles or award terms and adequately documented.
Questions to ask about each sampled cost:
- Is it in the approved budget, or was a needed prior approval obtained?
- Was it incurred during the period of performance?
- Does the documentation show what was bought, when, by whom and why it served the award?
- For shared costs, is the allocation method written down and applied the same way each time?
- For payroll, do time records support the percentage charged?
If you find a problem, don't hide it. Correct the entry, document what happened and talk to your auditor or funder. Finding and fixing an error yourself usually goes better than having it found for you. Our post on Uniform Guidance for program people explains the basics in plain language.
Brief your staff
Auditors may interview program and finance staff, so make sure people know what to expect.
- Name one coordinator who receives all requests and tracks what's been sent.
- Tell staff who may be contacted and that it's fine to say "I'll find out and get back to you."
- Ask everyone to answer honestly and stick to facts. Guessing creates more follow-up.
A week-by-week preparation checklist
Adapt this to your timeline. If you have less notice, compress it, but keep the order.
Week 1: Gather
- Confirm the type and scope of the audit or review, the dates and the contact.
- Get the PBC list or document request and assign each item an owner.
- Collect award documents, amendments and prior approvals for every award in scope.
Week 2: Reconcile
- Reconcile drawdowns to the general ledger for each award and explain differences.
- Reconcile reported expenditures to the ledger.
- Check that payroll charges match time records.
Week 3: Test and fix
- Sample transactions and test allowability and documentation.
- Review procurement files for purchases charged to awards.
- Correct errors and write short memos explaining any adjustments.
Week 4: Finalize
- Organize folders, update indexes and confirm every PBC item is ready.
- Brief staff and confirm who will attend meetings.
After the audit
- Respond promptly to follow-up questions.
- For any findings, write a corrective action plan with owners and dates. A Single Audit auditee must prepare a corrective action plan and follow up on findings (2 CFR 200.508).
Your next step
This week, pick your largest active award and do one reconciliation: total drawn versus total expenditures in your ledger. If you can explain every dollar of difference in a short memo, you're in good shape. If you can't, you've found your first fix. For the end-of-award side, see our post on reporting and closeout.
SoliContraX doesn't do audits or accounting. When the next funding notice comes, though, clean records make the application easier: your budget history, outcomes and capacity details are ready to use. With SoliContraX, you upload the notice, approve a concept and get a draft built from your own materials, then review and finish it. Get started with SoliContraX.