During grant negotiations, some agencies require a pre-award audit prior to the approval of your final award. Your accounting system, written policies and procedures, and internal controls must be ready to accommodate receiving and managing a federal grant. The DOE has an audit checklist available (as does the Department of Defense grant).
The items on these checklists include proper segregation on your chart of accounts related to direct and indirect costs and allowable and unallowable costs, labor distribution reports and the ability to invoice by project.
Being prepared for a pre-award audit is critical. Failing a pre-award audit will cause a delay in the approval of your grant award and may cause other bids and proposals in process to be rejected.