Internal Controls: Your Grant Survival Kit

Federal policies and priorities are constantly shifting, and without strong internal controls, your grant funding and credibility can be at risk. Think of this as your survival kit for protecting funding, ensuring compliance, and building resilience in any environment.

Recent changes in the federal administration have brought a wave of new priorities, regulatory adjustments, and oversight practices. For organizations that rely on federal grant funding, this evolving environment underscores a critical need: revisiting and strengthening internal controls.

Internal controls are not just a compliance checkbox; they are the framework that ensures funds are used properly, projects meet their objectives, and organizations remain audit-ready. With shifting regulations and heightened scrutiny, now is the time for grant administrators to sharpen their processes and anticipate new expectations.

 

Why Internal Controls Matter More Now

Federal grants have long come with compliance obligations, but the changes in administration can bring new priorities. New executive orders, shifts in agency leadership, and updated guidance can all affect how funding must be managed and reported. These changes may involve adjustments to cost principles, reporting formats, allowable activities, or even deadlines.

The implications for grantees are clear: yesterday’s controls may no longer be sufficient. Without a proactive review, organizations risk noncompliance, losing funding, or reputational harm. Strong internal controls provide a safeguard, ensuring compliance and the ability to adapt quickly as federal guidance evolves.

 

Key Areas for Strengthening Controls

1. Transparency in Financial Reporting: Agencies increasingly expect real-time expenditure tracking, subrecipient monitoring, and clear documentation

• 2 CFR §200.302 requires accurate, current, and complete disclosure of federally funded activities

• 2 CFR §200.334 requires records to be retained and accessible for audits

Organizations should update tracking systems, standardize documentation, and ensure timely reporting.

 

2. Staff Training on New Guidelines: Frontline staff must stay current with evolving requirements.

• 2 CFR §200.303(a) highlights internal controls for compliance

• 2 CFR Subpart E (Cost Principles) and §§200.317–200.327 (Procurement) guide consistency

Training should be continuous, not just onboarding.

 

3. Risk Management & Fraud Prevention: Risk identification and mitigation are central to compliance.

• 2 CFR §200.303 requires organizations to assess and address fraud risk

Segregation of duties, dual authorizations, and whistleblower protections strengthen controls.

 

4. Communication with Federal Agencies: Proactive communication reduces compliance risks. 

• 2 CFR §200.339 outlines remedies for noncompliance

Open dialogue with program officers clarifies evolving requirements before issues escalate.

 

5. Updating Policies & Procedures: Outdated policies expose organizations to risk.

• 2 CFR §200.303 requires organizations to assess and address fraud risk

• 2 CFR §200.430 governs compensation for personal services

Regular updates align practices with Uniform Guidance and agency-specific rules.

 

Moving From Compliance to Resilience

Internal controls aren’t just about compliance; they’re the blueprint for resilience and growth. Strong systems help organizations pivot when priorities shift, build confidence among funders, and embed accountability into daily operations. By treating controls as a strategic advantage, grant administrators move beyond defensive compliance toward long-term competitiveness.

As the White House recently noted in its Improving Oversight of Federal Grantmaking directive (August 2025): “There is a strong need to strengthen oversight and coordination of, and to streamline, agency grantmaking … (to) ensure greater accountability for use of public funds more broadly.” White House, Presidential Actions, 20255

Federal transitions inevitably bring uncertainty, but they also present opportunity. Reassessing internal controls now allows organizations to get ahead of compliance challenges and reaffirm their stewardship of public funds. The path forward requires more than checking boxes; it calls for transparency, continuous training, proactive risk management, open communication with federal partners, and regularly updating policies and procedures. By strengthening these areas, organizations not only protect existing funding but also position themselves for sustainable growth and resilience in an evolving federal landscape.