Subrecipient Monitoring

OFFICE OF RESEARCH ADMINISTRATION

2010

Definition:

Subcontract Subaward Consortium agreement Subrecipient agreement

All are treated the same . . . . . . . . . . . . . . .

All are initiated by Grant Services . . . . . . .

Subaward Versus Vendor Agreement

Subrecipient: performance is measured against the objectives of

the federal program has responsibility for programmatic decision making is responsible for adherence to applicable Federal

compliance requirements does not provide goods or services for the program is usually another higher education institution,

hospital, or other non-profit organization

Subaward Versus Vendor Agreement cont…

Vendor: provides goods and services within normal business

operations provides similar goods or services to many different

purchasers operates in a competitive environment provides goods or services ancillary to the Federal

program is not subject to the compliance requirements of the

Federal program is usually a company or may be an individual

Why is the type of agreement important?

Problems with classifying a subaward as a vendor: Federal compliance requirements do not flow down to

vendor no subcontract monitoring costs might not be charged in accordance to budget no restrictions on publicity or media releases not subject to conflicts of interest or research

misconduct policies potential for audit findings if misclassified

Why is the type of agreement important?

Problems with classifying a vendor agreement as a subaward: procurement standards required by Federal Circular

A-110 are bypassed (competitive bid process, cost and price analysis, sole source justifications, etc.

lack of IU Board of Trustee review, etc. for high dollar requisitions)

may impose unnecessary administrative and compliance burdens on the vendor (effort report system, annual audits, etc.)

requires our subrecipient monitoring limits vendor profits

Audits:

Annual A-133 audit of federal and federal pass through accounts

Ad hoc agency audits IU Internal Audit completed FY08

IA Key Findings: additional risk analysis needed additional training needed

How it works:Prime

funding agency

IUB & regional awards

IUPUI awards

Subrecipient 1

Subrecipient 2, etc.

Subrecipient1

Subrecipient 2, etc.

Subrecipient Monitoring

Types of sponsors:

Federal Non-Profit Foundations Higher Education State of Indiana Other Governmental Commercial

Can be Federal Pass ThroughFederal funds do not

lose their Federal identity when being passed through to a lower tier recipient

We require from the subcontractor at the proposal stage:

WHAT Institutional letter of support

Work statement

Detailed budget

F&A rate agreement

WHY States where to send

agreement for signature Makes clear for both parties

what will be accomplished

For ORA review in line with prime agency regulations

To ensure subcontractor applies correct rate to IU

The subcontracting process:

Project DirectorWrites proposal

---- subcontract in budget.

Grant Services

Contract Officer After award received,

writes subcontract; obtains all approvals.

Grant Services Reviews subcontractor’s

budget for completeness

and adherence to agency

guidelines. Processesproposal.

Fiscal Officer Initiates requisition

Procurement Services

Initiates purchase order

Grant Services

Consultant Approves PO, records

subcontract in FIS.

Research Administration ACE Team Monitors subrecipient institution, reviews risk

Grant Services Teams

State Board of Accounts

Research Administration ACE Team

InternalAudit

Fiscal Officer

Monitoring Responsibilities

Project Director

Risk Analysis: Risk may be high if:

Lack of good documented internal controls No previous IU experience with this subcontractor Lots of findings on previous A-133 reports Small entity not subject to A-133 Foreign institution For-profit with no audited financial report Subcontract agreement provideing more than

75% of the award to the subcontractor

Risk may be moderate if:

Previous A-133 findings related to IU Subcontract fails to respond to our request for

A-133 report certification (ACE Team) Subcontractor fails to submit timely

program/technical reports as requested in the subcontract agreement

Risk may be low if:

Another educational institution in the State of Indiana that is audited by the State Board of Accounts (Purdue, Ball State, Indiana State, etc.)

Subcontract dollar amount low – less than $5,000 The subcontract agreement is with another

educational institution having consistently good A-133 reports

Things to note:

We do not initiate subcontracts on underwritten accounts

A risk determination can change during the life of a subcontract if: IU findings are noted on A-133 report Subcontractor fails to submit progress reports Subcontractor does not submit final invoices

by the required date

Research Administration Role:

Collects subcontract info at proposal stage

Award setup, account setup, budget setup

Prepare, negotiate, and sign subcontract

Establish subcontractor risk

Financial reporting

Fiscal compliance monitoring

Project Director Role:

One-on-one collaboration with subcontractor PD Oversee programmatic aspects of subcontract –

is work is in line with subcontractor’s proposed work statement and our expectation

Determine if work is proceeding at a reasonable rate

Overall management and responsibility for expenditures

Monitor changes in subcontractor’s key personnel where IU approval is required

Fiscal Officer Role:

Initiate requisitions Review and approve subcontract invoices Review rate of spending with project director Ensure that IU account is charged correct indirect

cost under object code 4073, 4074,or 4075 Collect final invoice within 60 days after

subcontract end date.

How to monitor invoices:

PROJECT DIRECTOR Rate of spending is

reasonable given the work completed to date

Costs are reasonable Subcontractor’s progress

reports are submitted on time as outlined in the agreement

FISCAL OFFICER Time Period: Expense

incurred within subcontract period

Expense: detailed by budget line

Costs: allowable per prime agency and appear reasonable to the project

Subcontractor’s indirect cost agrees with their F&A rate agreement

A word about object codes:

4073

4074

4075

4073 for subcontract charges up to $25,000 on accounts with zero IU indirect cost

4074 for subcontract charges up to $25,000 on accounts with indirect costs

4075 for all subcontract charges over $25,000 regardless of indirect costs

Resources: Office of Research Administration web

http://researchadmin.iu.edu/index.html Subrecipient Monitoring Guidance on our web

http://researchadmin.iu.edu/GrantContract/gc-ace/ace_sub_monitoring.html

Important Notice 04-1, Subrecipients http://www.ovpra.indiana.edu/cg/imp_notice/04-1.asp

Project Director Reports https://fdrs.fms.indiana.edu/cgi-bin/pdw/Welcome.pl

OMB Circulars http://www.whitehouse.gov/omb/circulars_default/

Jan Young

ACE Manager (Audit, Compliance, Effort)

Office of Research Administration

jyoung@indiana.edu

855-5326