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A guide to documentation during COVID-19 for nonprofits

May 05, 2020

As grant-funded entities prepare for the transition to soft openings and full operations, it is necessary to take an opportunity to evaluate the response to the COVID-19 crisis — from the immediate closing of programs and locations to transitioning the workforce to remote locations and changed work schedules to determining how services can be provided to communities and how to continue paying the bills.

Many federal programs have continued to provide funding for programs and services so entities can respond to the emergency needs of the individuals and families in their communities. This has helped reduce the stress associated with bringing in funding to pay salaries, wages, benefits, rent, program expenses and other expenses. While federal funders continue to provide support throughout the COVID-19 response, one message has remained consistent: Do not forget to document.

There is that reminder deep in the back of our memory of Uniform Guidance relating to the factors of cost allowability — specifically, adequate documentation. Having supporting documentation is not new, so what is different now? In today’s operating environment, many entities have been forced to make some substantial changes to their procedures, from how need is determined to how authorizations are obtained.

However, before considering these, it is important to back up further and evaluate the following:

  • If operating changes were made in response to stay-at-home or similar orders, federal agencies are requesting entities to document how critical services were identified, prioritized and delivered. For those directly impacted by a loss of operations, detailed documentation supporting the impact to the entity, staff and community should be prepared.
  • If employees were transitioned to a remote work environment, determine how the entity’s policies and procedures accommodate this transition under extraordinary circumstances. It may be necessary to add or modify policies for telecommuting or alternative work arrangements.
  • If staff are continuing to provide services and engage participants on a modified, remote or virtual basis, direct staff to document this service delivery and engagement. If on-site operating hours have been modified, the entity should also document these changes and how program delivery temporarily changed.

It is necessary to document these circumstances to support expenses incurred and charged to federal grants that would not normally be experienced.

There is no standard answer when determining how much documentation is adequate. Today’s unique circumstances may require more detail than past events, so be generous with this documentation. Further, the extent of the detail and the type of documentation needed are also driven by what is required by funders, such as Uniform Guidance, and what is required by an entity’s adopted policies and procedures.

The entity’s policies and procedures weigh heavily in determining allowability of cost because they state what an entity can or cannot do and, therefore, what is or is not allowable.

There are many steps to take as you move forward, but include the following steps too:

  • Evaluate policies and procedures to determine whether they should be updated to accommodate future operating changes. Consider recent changes to operations and the workforce to determine how existing policies do or do not reflect the entity’s needs.
  • Evaluate the documentation gathered since the beginning of the COVID-19 crisis to determine whether it is complete. Are all receipts, invoices, approvals, procurement documents and more ready to be filed and retained? Have the operating changes, crisis effect, workforce changes and more been documented? If not, complete these while your memory is fresh.
  • Determine whether exceptions were made to existing policies and procedures. If so, document the reason for the exception and have it approved and signed off on by management or the board.

There is no all-inclusive checklist that will help each entity determine whether everything is in place. However, there is one general question to ask when it comes to documentation: Is the entity prepared for an audit or monitoring visit? The answer will help determine what still needs to be completed.

Need more help with COVID-19 issues?

We’re here to help you navigate the uncertainty of the COVID-19 pandemic and its impact on your people, finances and business. We have developed a library of resources in our COVID-19 resource center to help you stabilize today and prepare for tomorrow. We also have solutions that can help you manage your people strategy, operations, business finances and technology. We’re here to help. Contact us today.

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Author(s)

Katherine Eilers, CPA
Manager
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