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Alongside the large programmes of the EU, UN agencies and national development agencies, a significant share of Ukrainian civil society projects is funded by embassies, consulates and private foundations. These are small and medium grants with short timelines and simpler rules, and it is precisely that simplicity that creates specific problems at review time.<\/p>\n
Below we look at how this kind of cooperation differs from large donor programmes, what a typical agreement contains, how to prepare the financial report and when a small grant needs an audit.<\/p>\n
The first difference is the volume of contractual documents. Instead of a hundred pages of general conditions there is a contract of a few pages plus a budget. That is convenient but also risky: many questions are simply not regulated, the organisation decides at its own discretion, and the donor assesses the decision after the fact.<\/p>\n
The second is timing. A project may run from three months to a year, and reporting is due soon after it ends. There is almost no time to correct documents.<\/p>\n
The third is the absence of separate procurement rules in many such agreements. That does not mean competition is unnecessary: the donor still expects justified prices and may reject a cost without them. The practical answer is to apply the organisation’s own procurement policy, as described in our article on procurement in a grant project<\/a>.<\/p>\n A feature of small grants is that document copies are frequently submitted in full. For a project with a few dozen transactions this is feasible, which is why the quality of each individual document matters more than in a large project reviewed on a sample basis.<\/p>\n Embassies and foundations usually transfer funds in foreign currency. The classic question follows: at which rate should costs be shown in the report? The approaches found in agreements are:<\/p>\n If the agreement is silent, the safer route is the transaction-date rate required by accounting rules, with an explanatory note and the calculation attached to the report. Exchange differences on the cash balance are shown as a separate line rather than absorbed into costs.<\/p>\n Small grants do not always require an audit. It is typically needed when:<\/p>\n For small projects the usual format is agreed-upon procedures under ISRS 4400 or a review in the donor’s template: the auditor does not express an opinion but confirms factual findings against a list of procedures. The formats are compared in our article on ISA 800, ISA 805 and ISAE 3000<\/a>.<\/p>\n Three practices close most of the questions. First, a separate bank account, or at least separate project analytics in the accounts, from day one. Second, a project file in which documents are ordered by budget line rather than by date: donors and auditors then find what they need without asking. Third, a self-check at the mid-point of the project, while documents can still be completed.<\/p>\n Organisations running several small grants at once often find it easier to outsource project-level bookkeeping together with donor reporting: the financial report is then generated from the accounts rather than assembled by hand in a spreadsheet. We describe that arrangement on our accounting for NGOs and business<\/a> page.<\/p>\nWhat donors usually require<\/h2>\n
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Currency and exchange differences<\/h2>\n
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\n Approach<\/th>\n How it works<\/th>\n Where the risk is<\/th>\n<\/tr>\n \n Rate at receipt<\/td>\n The whole grant is fixed at the rate on the date of credit<\/td>\n The difference against actual costs falls on the organisation<\/td>\n<\/tr>\n \n Rate at transaction date<\/td>\n Each cost is translated at the rate of its own day<\/td>\n Requires careful transaction-level accounting<\/td>\n<\/tr>\n \n Average rate for the period<\/td>\n A single rate is applied for the period<\/td>\n Not accepted by all donors<\/td>\n<\/tr>\n<\/table>\n When an audit is needed<\/h2>\n
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Typical problems in small grant reports<\/h2>\n
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How to make the work easier<\/h2>\n