Grant Writing Budget and Financial Planning 5 — Questions and Answers
Question 1: What is the purpose of a 'carryover' request in grant management?
- To transfer unexpended grant funds from one year to the next with funder approval (Correct answer)
- To add a new budget category not in the original application
- To extend the period of performance without changing the budget
- To combine two separate grant awards into one account
Correct answer: To transfer unexpended grant funds from one year to the next with funder approval
A carryover request allows a grantee to use unspent funds from a prior grant year in a subsequent year, typically requiring funder notification or approval.
Question 2: Which of the following costs would most likely be classified as a 'direct cost' on a grant budget?
- The salary of the organization's CFO who oversees all programs
- Rent for the organization's headquarters shared by all departments
- A research assistant hired specifically for the grant project (Correct answer)
- General liability insurance for the entire organization
Correct answer: A research assistant hired specifically for the grant project
A research assistant hired exclusively for the grant project is a direct cost because the expense can be specifically and accurately attributed to the grant activity.
Question 3: Under what circumstance must a grantee complete a Single Audit?
- When it receives any amount of federal funding in a fiscal year
- When it expends $750,000 or more in federal awards in a single fiscal year (Correct answer)
- When it has more than 25 employees working on federal projects
- When it applies for more than three federal grants simultaneously
Correct answer: When it expends $750,000 or more in federal awards in a single fiscal year
The Single Audit Act (as implemented by the Uniform Guidance) requires a single audit for non-federal entities that expend $750,000 or more in federal awards during a fiscal year.
Question 4: A grant budget includes $5,000 for consultant fees. To be allowable, the consultant's rate must be:
- Below the rate paid to the organization's lowest-paid employee
- Reasonable and consistent with rates paid for similar services in the marketplace (Correct answer)
- Approved in advance by the federal Office of Management and Budget
- Fixed at no more than $500 per day regardless of expertise
Correct answer: Reasonable and consistent with rates paid for similar services in the marketplace
Consultant rates must be reasonable—consistent with what the market pays for comparable services—and should be documented with a rate justification or market comparison.
Question 5: What is the significance of segregating grant funds in a separate bank account or accounting cost center?
- It increases the allowable indirect cost rate automatically
- It ensures accurate tracking, prevents commingling, and simplifies audits (Correct answer)
- It is required only for awards over $1 million
- It eliminates the need to submit financial reports
Correct answer: It ensures accurate tracking, prevents commingling, and simplifies audits
Keeping grant funds separate (either in a dedicated account or through separate cost center coding) ensures expenditures are accurately tracked and prevents the prohibited practice of commingling with other funds.
Question 6: A grant officer asks for a 'burn rate analysis.' What information does this analysis typically provide?
- The ratio of indirect to direct costs in the budget
- The pace at which grant funds are being spent relative to the time elapsed in the grant period (Correct answer)
- The percentage of staff effort devoted to the project
- The number of program participants served per dollar spent
Correct answer: The pace at which grant funds are being spent relative to the time elapsed in the grant period
A burn rate analysis compares actual spending to the expected spending pace, helping identify if a project is under-spending (at risk of not meeting objectives) or over-spending (at risk of running out of funds early).
Question 7: Which of the following best describes 'cost reasonableness' as required by the Uniform Guidance?
- The cost must be the lowest possible price available on the market
- The cost reflects what a prudent person would pay under similar circumstances (Correct answer)
- The cost has been pre-approved by the federal awarding agency
- The cost is identical to what was charged in the prior grant year
Correct answer: The cost reflects what a prudent person would pay under similar circumstances
Reasonableness means the cost does not exceed what a prudent person would incur under similar circumstances, considering market conditions, necessity, and arms-length bargaining.
Grant Writing Budget and Financial Planning 5
What is the purpose of a 'carryover' request in grant management?