CNE Grant Management & Compliance 3 — Questions and Answers
Question 1: Which federal threshold triggers a Single Audit requirement for a nonprofit organization?
- Expending $750,000 or more in federal awards in a fiscal year (Correct answer)
- Receiving any federal grant over $500,000
- Having total annual revenue exceeding $1 million
- Employing more than 50 staff paid with federal funds
Correct answer: Expending $750,000 or more in federal awards in a fiscal year
Under 2 CFR Part 200 Subpart F, nonprofits that expend $750,000 or more in federal awards in a fiscal year must have a Single Audit conducted.
Question 2: In grant management, what does the term 'matching requirement' mean?
- The grantee must contribute a specified portion of project costs from non-federal sources (Correct answer)
- The grantee must match the number of federal staff with equal nonprofit staff
- The grantee must duplicate all federal reporting in its own accounting system
- The grantee must match grant expenditures to budget line items monthly
Correct answer: The grantee must contribute a specified portion of project costs from non-federal sources
A matching requirement obligates the grantee to contribute a defined percentage or dollar amount of non-federal resources toward the total project cost.
Question 3: What is 'scope creep' in the context of grant compliance?
- Gradual expansion of program activities beyond what the grant agreement authorizes (Correct answer)
- Increasing indirect cost charges without funder approval
- Adding new subrecipients without notifying the awarding agency
- Reporting expenditures in incorrect budget categories
Correct answer: Gradual expansion of program activities beyond what the grant agreement authorizes
Scope creep occurs when activities expand beyond the approved grant scope without a formal amendment, creating a compliance risk.
Question 4: A program officer discovers that grant funds were used to purchase equipment not listed in the approved budget. What is the most appropriate immediate step?
- Notify the awarding agency and seek retroactive approval or return funds (Correct answer)
- Reclassify the purchase as a direct program cost in the ledger
- Document the purchase internally and proceed without disclosure
- Request board approval for the expenditure at the next meeting
Correct answer: Notify the awarding agency and seek retroactive approval or return funds
Unapproved equipment purchases must be disclosed to the awarding agency; retroactive approval may be possible or funds must be returned.
Question 5: Which record retention period does Uniform Guidance typically require for federal grant financial records?
- Three years from the date of submission of the final expenditure report (Correct answer)
- Seven years from the grant start date
- Five years from the close of the fiscal year
- Ten years from the date of the Single Audit
Correct answer: Three years from the date of submission of the final expenditure report
Under 2 CFR §200.334, grantees must retain financial records for three years from the submission of the final expenditure report.
Question 6: What is the primary risk of commingling federal grant funds with general operating funds?
- Inability to demonstrate that federal funds were spent only for authorized purposes (Correct answer)
- Triggering an automatic audit by the IRS
- Forfeiting the right to apply for future federal grants
- Violating state incorporation requirements for nonprofits
Correct answer: Inability to demonstrate that federal funds were spent only for authorized purposes
Commingling makes it impossible to trace federal expenditures, violating the requirement that federal funds be used solely for the authorized grant purpose.
Question 7: A foundation grant requires a mid-year progress report. Which content is most essential to include?
- Narrative on outcomes achieved, budget versus actual expenditures, and any variances (Correct answer)
- A copy of the board's most recent meeting minutes
- A list of all donors who contributed to the matching requirement
- An updated organizational chart reflecting grant-funded staff
Correct answer: Narrative on outcomes achieved, budget versus actual expenditures, and any variances
Mid-year progress reports should document outcomes against stated objectives and compare actual spending to the approved budget, explaining significant variances.
CNE Grant Management & Compliance 3
Which federal threshold triggers a Single Audit requirement for a nonprofit organization?