When a grant is awarded, a formal agreement is established between the grantor and grantee, outlining the purpose, scope, and conditions of the grant, including requirements to comply with all relevant federal, state, and local laws, regulations, and policies that apply. Federal grants are governed by the Code of Federal Regulations (2 CFR 200) which include administrative requirements, cost principles, and audit requirements, commonly referred to as the Uniform Guidance. Often, recipients are required to submit regular progress reports, financial statements, and other documentation to demonstrate compliance with grant requirements, proper use of funds, and progress made towards the grant’s objectives. Audits may also be required by the granting entity to verify that the funds are used appropriately and in compliance with the grant agreement and regulations.
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