5 reasons to step up your documentation

Jun 9, 2020

We've encouraged local governments to step up their documentation practices, and for good reasons. Sometimes documentation is required by law or by the Budgeting, Accounting, and Reporting System (BARS) manuals. In other situations, documentation is a best practice for conducting government business and can help you in so many ways. Preparing your documentation at the time the event or transaction occurs ensures you capture the most accurate and complete information – both for you and for auditors who often review decisions and actions that happened in the past. When documentation is lacking, everyone struggles to remember the reasons or circumstances weeks, months and sometimes years later.

So local governments, if you still need convincing to document, document, document, here are five reasons you should do it:

1: Changing processes

Internal control processes have been changing due to the need to work from home. They are likely to change again as workers return to the office and their new normal. Whatever the case may be, you'll want to document any changes you make to your internal control processes. Auditors will want to understand each iteration of your control system throughout 2020; documentation will help you remember and more easily explain what occurred. This is especially important if you experience turnover.

2: Preparing for grant opportunities

Robust documentation is important when claiming reimbursements from federal or state programs. We know grant funds are available through the CARES Act and other legislation, and more might become available in the future. There is so much happening right now that if you do not take the time to document all the details about pandemic-related expenditures (and revenue losses), you might not be in the best spot to take advantage of these opportunities. Or you might risk expenditures being questioned later (and possibly denied) during audits or reviews by state or federal agencies.

3: Developing new programs and practices

If you are trying something new to spur economic development or help your constituents, you might wonder: Is it legal? Is this a gift of public funds? You might have taken our advice and talked to your legal counsel, or reached out to others such as the Municipal Research and Services Center (MRSC.org). Whatever actions you took, you'll want to keep documentation. This should include the items you considered, whom you consulted, key facts, legal rationale, and ultimately your conclusions and the actions you took. If legal counsel provides you documentation directly, even better!

4: Making exceptions to policy

Given the pandemic and the unique circumstances we find ourselves in, it's possible you've had to make some policy exceptions. For example, maybe you had an emergency procurement that bypassed your normal bidding process. It's important to keep documentation to support approvals and the reasons for these actions. That way, if internal management or auditors have questions later, you'll have the information you need to explain the circumstances. Ideally your policy will provide for a process for making and approving exceptions. If you feel your exceptions are outside the scope of your policy or you have other concerns about your policy, it might be time for an update.

5: Supporting key decisions

You might make an important decision, such as how to apply grant guidance in managing federal awards. Or perhaps you decide whether to implement or defer accounting standards, as allowed under Governmental Accounting Standards Board Statement No. 95. Whatever the case may be, the time to document those decisions is as they are made. To create documentation, a couple options are to follow up a verbal discussion with a written email or write a brief memo with key information to keep. If the federal grantor provides you information such as specific criteria or guidance, make sure you keep copies of it to support the information you relied on to make decisions.

Do you need further assistance?

Remember, we are here to help. You can reach out to us using our helpdesk service with specific questions. Or email Center@sao.wa.gov if you'd like to talk with one of our financial management specialists at the Center for Government Innovation.