Elixir Audits, Chartered Accountants
OverviewWhat is includedHow it runsFees and timingQuestions

A grant audit answers a narrower question than a statutory audit. It asks whether the money was spent on what the grant agreement said, whether the supporting evidence exists, and whether the rules the funder imposed were followed. It is not an opinion on the organisation as a whole.

Three different engagements, often confused

A project or grant audit gives an opinion on a statement of expenditure for a specific grant. An agreed-upon procedures engagement performs the exact tests the funder specifies and reports factual findings without an opinion, which is what most EU-funded programmes actually require. An expenditure verification is a form of agreed-upon procedures with the European Commission's own terms of reference.

Funders use these terms loosely and sometimes interchangeably. We read the grant agreement rather than the covering email, because the wrong engagement type produces a report that cannot be accepted, however good the underlying work.

What the funder is really testing

Eligibility, above everything. Was the cost incurred within the implementation period, was it provided for in the approved budget, was it necessary for the activity, and can it be traced to a document. A cost that fails any one of those is disallowed and, in most agreements, has to be repaid.

After that: procurement thresholds, cost allocation between grants, staff time records, and whether local statutory obligations were met. That last one catches organisations regularly, because a payment made without deducting withholding tax is a compliance failure in Ghana even where the funder has no view on it.

Why the deadline is not negotiable

Grant audit deadlines are usually tied to the release of the next tranche or to the closure of the programme. A late report can suspend disbursement, which affects staff who need paying and beneficiaries who are expecting a service. We plan grant work backwards from the funder's date and we say at the outset if it is not achievable, rather than discovering it in week three.

ISRS 4400

The standard governing agreed-upon procedures engagements

2 to 4 weeks

Typical duration for a single grant, where records are complete

Funder's template

Not ours. The format is set by the grant agreement

Scope

What we do for NGOs and programmes

Most organisations need more than one of these in a year, particularly where several funders are running concurrently.

01

Project and grant audits

An opinion on the statement of expenditure for a specific grant, covering eligibility, supporting documentation, compliance with the grant agreement and the accuracy of amounts reported to the funder.

Statement of expenditureEligibility testingBudget varianceFunder templates
02

Expenditure verification

Agreed-upon procedures under the European Commission's terms of reference, reporting factual findings against the specified procedures without expressing an opinion. The most common requirement for EU-funded actions.

EU terms of referenceFactual findingsAUP reportingGrant closure
03

Institutional audit

The statutory audit of the organisation as a whole, covering all funds and all funders, which most NGOs also require annually for their board, their regulator and their registration.

Annual financial statementsIFRS for SMEsBoard reportingStatutory filing
04

Internal control and systems review

Before a large grant, or after a funder raises a concern. We test cost allocation, procurement, payroll, asset management and cash handling, and write the findings so that a small finance team can actually act on them.

Cost allocationProcurement controlsAsset registersFraud risk
05

Pre-award and capacity assessment

For international NGOs assessing a local implementing partner, or for a partner preparing to be assessed. We test whether the systems can carry the grant before the money moves rather than after.

Partner assessmentCapacity reviewReadiness supportRemediation plans

Process

How a grant audit runs

Shorter than a statutory audit and considerably less forgiving on documentation, because eligibility is a documentary test.

The single biggest time saverA cost allocation policy, written down, applied consistently and available to the auditor on day one. Organisations that have one finish on schedule. Organisations that reconstruct the basis during fieldwork do not.

Documents and scoping

We read the grant agreement, the terms of reference and the funder's template, then confirm the engagement type. Getting this wrong at the start invalidates everything after it.

Before the proposal

Planning

Materiality set on the funder's convention rather than ours, sample sizes agreed, and a document request list issued against the specific cost categories in the budget.

Week 1

Testing

Eligibility, supporting documentation, procurement compliance, payroll and time records, cost allocation and the reconciliation between the statement of expenditure and the accounting records.

One to two weeks

Findings discussion

Every exception is put to management before it appears in a report. Frequently the evidence exists and simply was not filed where we looked.

Before drafting

Report

Issued in the funder's template, with findings and any disallowed costs clearly identified and quantified.

On completion

Management letter

Separately, the control weaknesses we found and what to do about them before the next grant. This is the part that reduces findings next year.

With the report

Engagement

Fees, timing and who does the work

Fee basis

Fixed fee per grantSet on the grant value, the number of cost categories, transaction volume and the funder's procedures. Multi-grant engagements are quoted together.

Who does the work

A manager and a partnerThe same team across your grants, so the cost allocation basis does not have to be re-explained each time.

Timeline

Two to four weeksFrom receipt of complete records to the issued report, for a single grant. Longer where several funders are audited together.

Indicative only. Every fee is quoted in the proposal, before any work starts, and held unless the scope changes.

Sectors

Programme areas we work across

Health and WASH

Commodity procurement, facility-level spend and community disbursements.

Education

School-level grants, stipends and materials procurement.

Agriculture and livelihoods

Input distribution, farmer payments and beneficiary verification.

Governance and civil society

Advocacy, training and sub-grant management.

Humanitarian response

Rapid disbursement, cash transfers and emergency procurement.

Climate and environment

Multi-year programmes with technical assistance components.

Gender and youth

Small-grant portfolios with many low-value transactions.

Sub-grantee portfolios

Where you disburse onward and carry the assurance obligation.

Funders

Every funder wants something different

That is the practical difficulty with grant assurance. The underlying work is similar, but the report format, the materiality convention, the eligibility rules and the deadline are set by the funder, not by the auditor. A report in the wrong template is a report that gets rejected.

What we need from you at the start The grant agreement, the terms of reference for the audit, and the funder's report template if they publish one. With those three documents we can tell you the scope and the fee accurately. Without them, any quote is a guess and any timetable is optimistic.

Where grant audits usually go wrong

  • Costs charged to the wrong grant, or to two grants
  • Shared costs allocated without a documented basis
  • Procurement that did not follow the funder's thresholds
  • Staff time charged without timesheets to support it
  • Exchange rate applied at the wrong date on foreign currency grants
  • Withholding tax not deducted on payments to local suppliers
  • Assets purchased with grant funds not on any register

None of these are unusual and none are dishonest. They are what happens when a small finance team runs several grants at once without a cost allocation policy.

Questions

Questions from finance and programme teams

What is the difference between a grant audit and an expenditure verification?
A grant audit gives an opinion on a statement of expenditure. An expenditure verification performs procedures the funder has specified and reports factual findings without an opinion. Most EU-funded actions require the second. The grant agreement determines which applies, so we read it before quoting.
Our funder has its own report template. Can you use it?
Yes, and we will insist on it. A report in the wrong format gets rejected regardless of the quality of the work behind it. Send the template with the grant agreement and we will confirm we can issue in it before you appoint us.
What makes a cost ineligible?
Most commonly: incurred outside the implementation period, not provided for in the approved budget, unsupported by documentation, or procured without following the funder's thresholds. Ineligible costs are normally disallowed and repayable, which is why testing them early rather than at reporting matters.
Can you audit several grants at once?
Yes, and it is usually cheaper and faster. Shared testing across grants, one cost allocation review rather than several, and a single fieldwork visit. Each funder still receives its own report in its own format.
Do we need an institutional audit as well as grant audits?
Almost always. Grant audits cover specific funds. An institutional audit covers the organisation as a whole and is what your board, your registration and most funders require annually in addition to grant-specific assurance.
Does withholding tax apply to grant-funded payments?
Generally yes. A grant being tax-exempt at the organisation level does not remove the obligation to deduct withholding tax on payments to suppliers and contractors. This is one of the most common findings we raise, and the liability sits with the organisation, not the funder.
How quickly can you start?
Where the grant agreement, terms of reference and template are available, we can normally issue a proposal within one working day and start within two weeks. If your disbursement depends on the report, tell us the funder's deadline in the first conversation.
Can you help us prepare rather than just audit?
Yes, though not on the same grant we are auditing. Pre-award readiness, cost allocation policy design, procurement thresholds and finance team training are separate engagements, and we keep them separate for independence reasons.

Related

Read before you brief us

ServiceAudit and Assurance: the full practiceToolAudit readiness checklistServiceOutsourced accounting for donor-funded organisations

Next step

Send us the grant agreement and the funder's deadline.

With those two documents we can give you scope, timing and a fixed fee within one working day, and tell you honestly whether the deadline is achievable.

Request a grant audit proposal Speak to an adviser

Contact

+233 53 362 2433 info@elixiraudits.com

1 Alex Nkrumah Street, Airport West, Accra

Also under Audit and Assurance

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Forensic audit and investigations

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