When preparing for a grant audit, one of the most frequent questions is: “What exactly counts as audit evidence?” The answer depends on the scope of the audit, the donor’s requirements, and the type of assurance being provided, whether it is an audit, reasonable assurance, limited assurance, or agreed-upon procedures.
This article offers a general guide to help grant recipients understand what auditors typically look for.
What is Audit Evidence?
Audit evidence refers to the documents, records, and supporting information that demonstrate how grant funds were used. It helps auditors verify that:
- Costs are eligible under the grant agreement.
- Expenditure is properly approved and recorded.
- Delivery actually took place.
- Internal controls were followed.
What Auditors Commonly Request
While requirements vary by donor and audit scope, here are typical categories of evidence:
1. Financial Documentation
Invoices and Payment Records
Must be clearly linked to the funded activity, with evidence of approval at the time such as authorised payment runs, signed approval forms, or system-based signoffs.
Auditors will check that the organisation followed either its own financial policies or the donor’s requirements. whichever is stricter.
Staff Costs
Auditors expect a clear calculation showing how payroll data translates into project charges. This includes:
- Timesheets that are signed and dated by both the employee and their supervisor showing approval, whether physical or system based
- Payroll summaries and allocation methodology
- Approval of time charged to the project, ideally contemporaneous with the reporting period.
Procurement Evidence
Includes tender documents, quotes, contracts, and records of supplier selection. Auditors will look for evidence of procurement process and approval at the time decisions were made, not retrospectively. This is especially important where a single supplier justification is being applied.
Financial Reports vs Budget
Auditors will compare actual spend against the approved budget in the grant agreement. Where there are variances, they expect clear explanations, ideally documented, and approved, showing why changes occurred and whether funder approval was required.
Travel Costs
Must be reasonable, clearly linked to project delivery, and within donor limits. Some donors require boarding passes or similar in addition to receipts and approval records.
2. Delivery Evidence
- Photos, reports, attendance logs and other evidence that proves the activity occurred and aligns with the grant’s objectives.
- Evidence should be clearly linked to the project and the reporting period.
3. Internal Controls and Oversight
- Records of budget monitoring, compliance checks, and corrective actions.
- For consortium delivery, documentation showing how the lead organisation monitored partner spend and delivery.
Tips for Audit Readiness
Preparing for a grant audit is not just the responsibility of the finance team — it requires coordination across the entire project team. Here is how to stay ahead:
- Document approvals at the time.
- Organise records centrally by cost category and reporting period, avoid storing documentation with individuals.
- Review donor guidance early and ensure the whole project team understands what is expected.
- Track spend against the approved budget and explain any variances clearly.
- Retain all supporting documentation in a shared, accessible location.
What to do Now
At Menzies LLP, we help grant recipients prepare for audit with confidence, ensuring their documentation stands up to scrutiny, aligns with funder expectations, and supports future funding.
Whether you are navigating complex donor requirements or simply want clarity on what is expected, we provide clear deliverables, tailored guidance, and practical support.
If your organisation receives grant funding and may require a grant audit or assurance engagement, get in touch. We are here to help.
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