3.14 Subrecipient Management and Monitoring
Subrecipient Monitoring
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Subrecipient Agreements
Subaward Monitoring Procedures
Subrecipient Audits
The purpose of subrecipient monitoring is to ensure that the subaward is being used for the authorized purpose, in compliance with the federal program and grant requirements, laws, and regulations, and the subaward performance goals are achieved. All pass-through entities are required to monitor their subrecipients. The requirements for subrecipient monitoring can be found in 31 U.S.C. ?? 7502 and in Title 2 C.F.R. ?? 200 (including, but not limited to, the sections on “Subrecipient Monitoring and Management” contained in Subpart D and audit requirements applicable to subrecipients contained in Subpart F).
Additional requirements can be found in the program legislation and the terms and conditions of your award.
Financial Management Tip
To effectively monitor your subrecipient, you need to ensure that Federal award information and compliance requirements are identified to the subrecipient at the time of the award and that subrecipient activities are monitored throughout the grant period.
As part of your organization???s subrecipient monitoring process, you need to develop systems, policies, and procedures to ensure that subrecipient reviews are conducted in accordance with Federal program and grant requirements, laws, and regulations.
Additionally, your organization should develop, implement, and perform procedures to ensure that the subrecipient obtains the required audits, and that audit findings identified in subrecipient audit reports are timely and effectively resolved and corrected.
Subrecipient Agreements
When you, as a pass-through entity, make an award to a subrecipient, you must clearly identify the Federal award information and applicable compliance requirements, including applicable special conditions, in the subrecipient award agreement. Pass-through entities must ensure subaward documents include the following information at the time of the subaward. If any of these data elements change during the period of performance, the changes must be included in subsequent subaward modifications. The subaward must include the following information:
- Federal Award Identification;
- Subrecipient Name (which must match the registered name in DUNS);
- Subrecipient DUNS number;
- Federal Award Identification Number (FAIN);
- Federal Award Date;
- Subaward Period of Performance Start and End Date;
- Amount of Federal Funds Obligated in this action/agreement;
- Total Amount of Federal Funds Obligated to the Subrecipient;
- Total amount of the Federal Award;
- Federal Award Project Description;
- Name of the Federal Awarding Agency, Pass-through entity, and contact information for the awarding official;
- Catalog of Federal Domestic Assistance (CFDA) number and name;
- Identification of whether the award is Research and Development (R&D);
- Indirect cost rate for the Federal award;
- All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with federal statutes, regulations and the terms and conditions of the Federal award;
- Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the DOJ grant-making component including identification of required financial and/or performance reports;
- Indirect cost rate to be used by the subrecipient (either a federally-approved rate, a rate negotiated between the pass-through entity and the subrecipient, or the de minimis indirect cost rate);
- A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient???s records and financial statements as necessary for the pass-through entity to meet the requirements of 2 C.F.R. ?? 200; and
- Appropriate terms and conditions concerning closeout of the subaward.
Additional elements to consider including in the agreement are listed in this chapter in the Best Practices section.
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Subrecipient Monitoring Procedures
The pass-through entity must have established, written policies on subrecipient monitoring, as described in 2 C.F.R. ?? 200.331. As the pass-through entity, you are required during the program period to monitor the subrecipient???s use of Federal funds. You should evaluate the subrecipient???s risk of non-compliance with Federal statutes, regulations and terms and conditions of the subaward for purposes of determining the appropriate monitoring. The methods of monitoring may vary; some of the factors you may want to consider in determining the nature, timing, and extent of monitoring are as follows:
- Subrecipient???s prior experience with the same or similar subawards;
- Results of previous audits;
- Whether the subrecipient has new personnel or a new or substantially changed system;
- The extent and results of Federal awarding agency monitoring.
Subrecipients may be evaluated as higher risk or lower risk to determine the need for closer monitoring. Generally, new subrecipients require closer monitoring. For existing subrecipients, closer monitoring may be warranted based on results noted during monitoring and subrecipient audits, (e.g., the subrecipient has a history of non-compliance as either a recipient or subrecipient, new personnel, or new or substantially changed systems).
- Programs with complex compliance requirements have a higher risk of non-compliance;
- The larger the percentage of program awards passed through, the greater the need for subrecipient monitoring;
- Larger dollar awards are of greater risk.
Some of the mechanisms you may use to monitor subrecipient activities throughout the year include regular communication with subrecipients, and appropriate inquiries concerning program activities; performing subrecipient site visits to examine financial and programmatic records and observe operations; and reviewing detailed financial and program data and information submitted by the subrecipient.
However, when no site visit is conducted, the pass-through entity should be familiar with the subrecipient???s financial operations and procedures, as well as their maintenance of current financial data such as timesheets, invoices, contracts, and ledgers that tie back to financial reports.
Subrecipient monitoring by the pass-through entity must include:
- Reviewing financial and performance reports submitted by the subrecipient;
- Following-up and ensuring that subrecipient takes action to address deficiencies found through audits, onsite reviews, and other means, and
- Issuing a management decision for audit findings pertaining to the award (see below, and 2 C.F.R. ?? 200.521 (c)).
The purpose of these monitoring activities is to provide reasonable assurance that the subrecipient has administered the pass-through funding in compliance with the laws, regulations, and the provisions of the award and that the required performance goals are being achieved.
Action Item
You must have written subrecipient monitoring policies and procedures.
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Subrecipient Audits
Your organization needs to develop procedures to ensure that subrecipients expending $750,000 or more in Federal awards during the subrecipient’s fiscal year provide you with the required completed audit within 9 months after their year-end or one month after the issuance of their audit. Upon receipt of the subrecipient audit you need to:
- Evaluate the impact of subrecipient activities on your organization’s ability to comply with applicable Federal regulations,
- Issue a management decision on audit findings within 6 months after receipt of the subrecipient’s audit report, and
- Ensure that the subrecipient takes timely and appropriate corrective action on all audit findings.
In cases of continued inability or unwillingness of a subrecipient to have the required audits conducted, you, as the Federal awardee, shall take appropriate action using sanctions. It is important that you have policies and procedures in place to properly exercise your fiduciary responsibility in executing your own award requirements should a subrecipient not comply with requirements, laws, and regulations.
As prescribed in 2 C.F.R. ?? 200 Subpart F, subrecipients are not required to submit a copy of the reporting package to you when there are “no audit findings,” i.e., when the schedule of findings and questioned costs does not disclose audit findings relating to the Federal award requirements that you provided in the agreement with your subrecipient, and the summary schedule of prior audit findings does not report the status of audit findings relating to Federal awards.
Financial Management Tip
You may use the information in the Federal Audit Clearinghouse (FAC) database as evidence to verify that the required audit was performed and the subrecipient had “no audit findings.” This verification is in lieu of reviewing submissions from the subrecipient when there are no audit findings. The FAC database is available online.
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