If your company is in a Life Science and Innovation industry, such as biotech, biomed, health IT, nanotechnologies, or communications, you may receive money from local, state or Federal grant programs to fund the research or clinical trials on your drug, medical device, or disruptive technology. Be knowledgeable about the agreements you’re signing – as a high school professor once taught me, “There’s no such thing as a free lunch.”
These monies often come with extra responsibilities that can be time consuming and costly and while the benefits of the grants are often necessary, be aware of the requirements as well. Many of these grants require the company receiving the funds to provide reports and results from their studies that proves progress of their research. These may be required on a periodic basis or as a final report. Certain grant programs may require your company to provide internships to students from local institutions. And often, depending on the amount of the award received and the government agency providing the funds, your company may end up requiring an audit from an independent public accounting firm.
Your company’s investors or bank may already require you to have your financial statements audited on an annual basis, but if you’re receiving funds through a government program, it may require a different type of audit. Monies received from certain government agencies over a specific dollar threshold require either a government audit or an A-133 audit to be performed. Both of these audits have additional requirements that are not typical in your standard audit that follows Generally Accepted Auditing Standards. If you’ve never had an audit requirement in the past, you may get sticker shock at how much audits cost. At the end of the day, though, certain procedures must be performed to comply with these auditing standards and the cost of noncompliance is worse – not complying with the grant agreements can mean a reduction of funding or non-renewal of the agreement for additional phases
To ensure you’re not surprised by these requirements when receiving government funds, be sure to read through the agreement for your grant award carefully. If you’re still unclear of what may be required from an audit perspective, post a comment below or contact our Life Sciences & Innovation Group at 440-449-6800.