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Compliance/Audit

Effective financial management involves ethical decision-making and compliance with award terms and conditions, in addition to fiscal considerations.

Monitoring Project Expenditures – Department Administrators, in consultation with the Principal Investigator (PI), should perform a monthly review and reconciliation of financial activities posted against their projects to ensure costs are appropriately charged to the accounts.  Match/cost sharing must be monitored/tracked on these activities. 

Charging Costs to your project – The sponsor's specific guidance provides details on which costs are allowable on an award/project.  If in doubt, contact the Office of Sponsored Programs.

If a cost is considered a Facilities and Administrative (F&A) cost, follow the established guidelines for determining when it is appropriate to charge such costs directly to a project. Review the 2CFR 200-Uniformed Guidance.

Sponsored Program Analysts assigned to federal awards conduct compliance reviews to ensure the university adheres to federal guidelines. Department Administrators will receive be emailed if additional justifications or further action is required.

Audit

The federal government mandates any institution that spends more than $750,000 in federal funds during its fiscal year to complete a "Single Audit" (explained in Uniform Guidance-Subpart F). UTHSC conducts this audit annually, as it's federally funded expenses exceed this threshold. Additionally, as part of the State of Tennessee, the university is also subject to audits conducted by the state.

Audit Readiness Guidelines:

  • The audit begins at award setup when the Notice of Award (NoA) is received.  Familiarize yourself with the award terms and conditions and review your project budget in our financial system for accuracy.
  • Review expense transactions posted to your projects monthly for accuracy, legitimacy, and completeness.
  • Resolve issues immediately when discovered. DO NOT WAIT TO handle the issue!
  • Create and document your procedures/processes and ensure everyone assigned to projects follows your documented procedures.
  • Maintain supporting documentation for each transaction (ideally attached to the related transaction).
  • Ensure payroll corrections and effort percentages are well documented and justified.
  • Review prior audits to identify high-risk areas of grant management.
Mar 5, 2026