|Financial Reviews / Pre-award Assessments
|Increasingly more and more donors require assurance on the capacity and performance of their grantees. This type of assurance can be split into two sections:
- pre-award (prior to the grant-giving)
- post-award (during/after expenditure of the grant)
Because funding organizations are often negatively exposed in the media in cases of fraud at their grantees, donors have the increased tendency to have pre-award assessments performed. These assessments focus mainly on the financial and procedural capacity of the organization which gives insight on areas such as procurement, banking, expenses, authorization, structures, assets and so on. By identifying issues the prospective grantee is provided with a useful assessment and supports the grant-giver in its decision. SSA provides the client (donor or recipient) with an in-depth report on findings and recommendations.
Many grants do not require an audit as such or are so small that an official audit would not be cost effective. The cost of an audit is much higher than a financial review. However, from an accountability point of view (for both donor to the public but grantee to their stakeholders as well) some sort of an assessment during or at the end of the project is deemed useful. For the donor this can be a follow-up on the pre-award assessment: up to what extent has the grantee followed up the recommendations, are there new issues to be reported or are the expenses reported on accurate? Although this assessment does not provide an audit opinion and therefore legally less binding, our clients can still expect an in-depth review. Generally we carry out the following:
- reconciliations (e.g. fund accountability statement, bank, cash)
- substantive testing of expenses
- testing of policies and procedures
- compliance with grant terms and conditions
- issuing of a report including recommendation
Selection of (sub) Recipients and monitoring
One of the major strengths of SSA is its in-depth understanding of organisational and financial set-up combined with specific donor rules and regulations. It is for this reason that we have assisted many of our clients on selection of recipients and sub-recipients. If not carried out properly a prime recipient runs an enormous risk, possibly being held liable if there is mismanagement or maybe even fraud at the (sub) recipient.
Once this process has been successfully concluded and the prime and sub-recipient have signed an agreement, SSA can take up the monitoring in terms of finances but also on the more programmatic side. SSA takes a holistic approach and believes that finance is closely interlinked with program objectives and results. Having a proper understanding of both is therefore imperative for an excellent service delivery.