Subrecipient Monitoring:Subrecipient Monitoring:Riding The Storm OutRiding The Storm Out

Tom Egan, MIT OSPTom Egan, MIT OSPBethanne GiehlBethanne GiehlUniversity of MassachusettsUniversity of MassachusettsMedical SchoolMedical School

SUBRECIPIENT MONITORINGSUBRECIPIENT MONITORING

What is a subrecipientWhat is a subrecipient OMB Compliance RequirementsOMB Compliance Requirements Subrecipient Monitoring ClassesSubrecipient Monitoring Classes Subrecipient Monitoring ApproachesSubrecipient Monitoring Approaches A-133 Audit Report ReviewA-133 Audit Report Review Subrecipient Monitoring FinancialSubrecipient Monitoring Financial Subrecipient Monitoring TechnicalSubrecipient Monitoring Technical

DEFINITION OF SUBRECIPIENTDEFINITION OF SUBRECIPIENT

Financial assistance, or procurement, or Financial assistance, or procurement, or contract made by a recipient to an eligible contract made by a recipient to an eligible subrecipientsubrecipient– Includes any financial assistance when provided by Includes any financial assistance when provided by

legal agreement, even if the agreement is called a legal agreement, even if the agreement is called a contractcontract

– Does not include the purchase of goods and servicesDoes not include the purchase of goods and services

DEFINITION OF SUBRECIPIENTDEFINITION OF SUBRECIPIENT

The legal entity to which a subaward is made The legal entity to which a subaward is made and which is accountable to the recipient for and which is accountable to the recipient for the use of funds provided.the use of funds provided.– See agency implementations of A-110 to determine See agency implementations of A-110 to determine

what type of entity can be a subrecipient.what type of entity can be a subrecipient.

Note guidance on distinguishing between Note guidance on distinguishing between subrecipient and a vendor.subrecipient and a vendor.

SUBRECIPIENT AGREEMENTSSUBRECIPIENT AGREEMENTS

Funding from a prime recipient to a subrecipient Funding from a prime recipient to a subrecipient to carry out specific program activities.to carry out specific program activities.– May be termed a subgrant from an assistance awardMay be termed a subgrant from an assistance award– May be termed a subcontract from a procurement May be termed a subcontract from a procurement

awardaward– The term “subrecipient” and “subawardee” are used The term “subrecipient” and “subawardee” are used

interchangeably.interchangeably.

SUBRECIPIENT MONITORING SUBRECIPIENT MONITORING

OMB Compliance Requirements: OMB Compliance Requirements: Attachment M Subrecipient MonitoringAttachment M Subrecipient Monitoring

The March 2004 Compliance Supplement was revised to clarify The March 2004 Compliance Supplement was revised to clarify OMB’s expectations related to subrecipient monitoringOMB’s expectations related to subrecipient monitoring..

Annual request for subrecipient’s A-133 report is not sufficient.Annual request for subrecipient’s A-133 report is not sufficient. On-going review and oversight are expected and may include:On-going review and oversight are expected and may include: -Reviewing financial and performance reports-Reviewing financial and performance reports

-Performing site visits to review information and observe operations-Performing site visits to review information and observe operations-Regular contact and appropriate inquires-Regular contact and appropriate inquires

Subrecipient Monitoring: ClassesSubrecipient Monitoring: Classes

Four “Classes” of SubrecipientsFour “Classes” of Subrecipients Not-for-profits with Federal expenditures in Not-for-profits with Federal expenditures in

excess of $500,000excess of $500,000 Not-for-profits with Federal expenditures less Not-for-profits with Federal expenditures less

than $500,000than $500,000 Non US-based entitiesNon US-based entities For-profit entitiesFor-profit entities

Subrecipient Monitoring: ApproachesSubrecipient Monitoring: Approaches

Factors such as the size of awards, Factors such as the size of awards, percentage of the total program's funds percentage of the total program's funds awarded to subrecipients, and the complexity awarded to subrecipients, and the complexity of the compliance requirements may of the compliance requirements may influence the extent of monitoring proceduresinfluence the extent of monitoring procedures

““Monitoring activities may take various forms …”Monitoring activities may take various forms …”

Risk-Based ApproachRisk-Based Approach

Subrecipient Monitoring:Subrecipient Monitoring:Not-for-profits > $500,000Not-for-profits > $500,000

Well defined in OMB Circular A-133Well defined in OMB Circular A-133 Review of the entity’s A-133 AuditReview of the entity’s A-133 Audit

– Options – Web, Report, confirmationOptions – Web, Report, confirmation– Look for items that affect subrecipients Look for items that affect subrecipients – Significant items not directly affecting Significant items not directly affecting

subrecipients should be investigatedsubrecipients should be investigated– When identified, issues should be resolved in a When identified, issues should be resolved in a

timely mannertimely manner

Subrecipient Monitoring:Subrecipient Monitoring: Not-for-profits < $500,000 Not-for-profits < $500,000

Entities receiving less than $500,000 in Entities receiving less than $500,000 in totaltotal Federal monies are not required to receive Federal monies are not required to receive an A-133 auditan A-133 audit– Prime recipient should require the subrecipient to Prime recipient should require the subrecipient to

confirm in writing that they did not receive over confirm in writing that they did not receive over $500,000$500,000

– May be done with a confirmationMay be done with a confirmation

Subrecipient Monitoring:Subrecipient Monitoring:Non-US based & For-ProfitsNon-US based & For-Profits

Prime should perform a risk assessment Prime should perform a risk assessment before award is grantedbefore award is granted– Key policies governing internal controls should be Key policies governing internal controls should be

examinedexamined– Visit to the subrecipients place of work to assess Visit to the subrecipients place of work to assess

control environmentcontrol environment– Other audits and reportingOther audits and reporting– Development of a plan to monitorDevelopment of a plan to monitor– Remember – this is based upon Remember – this is based upon RiskRisk

Subrecipient Monitoring:A-133 Audit Report Review

Research and review results of subrecipient’s OMB Circular Research and review results of subrecipient’s OMB Circular A-133 audit reported in the Federal Audit Clearinghouse. A-133 audit reported in the Federal Audit Clearinghouse. This is the primary monitoring step for the Research This is the primary monitoring step for the Research Administrator. Information presented within Federal Audit Administrator. Information presented within Federal Audit Clearinghouse is relied upon as sufficient evidence of Clearinghouse is relied upon as sufficient evidence of compliance with the provisions of OMB Circular A-133 if the compliance with the provisions of OMB Circular A-133 if the organization:organization:

– Receives an unqualified opinion on the financial statementsReceives an unqualified opinion on the financial statements– Receives an unqualified opinion on internal controlsReceives an unqualified opinion on internal controls– Has no material weaknesses reportedHas no material weaknesses reported– Has no reportable conditions related to Federal awards Has no reportable conditions related to Federal awards

http://harvester.census.gov/sac/dissem/accessoptions.html?submit=Retrieve+Recordshttp://harvester.census.gov/sac/dissem/accessoptions.html?submit=Retrieve+Records

FEDERAL AUDIT CLEARINGHOUSEFEDERAL AUDIT CLEARINGHOUSE

Subrecipient Monitoring:Subrecipient Monitoring: A-133 Audit Report ReviewA-133 Audit Report Review

Subrecipient MonitoringSubrecipient Monitoring: A-133 Audit Report Review: A-133 Audit Report Review

Subrecipient Monitoring:Subrecipient Monitoring:A-133 Audit Report ReviewA-133 Audit Report Review

For subrecipients not listed in the Federal For subrecipients not listed in the Federal Audit Clearinghouse, the Research Audit Clearinghouse, the Research Administrator should make inquiries by Administrator should make inquiries by forwarding a confirmation request letter to forwarding a confirmation request letter to determine whether an audit was required determine whether an audit was required and, if so, the status of the audit. Retain and, if so, the status of the audit. Retain copy of inquires and complete 2nd and copy of inquires and complete 2nd and subsequent inquiries as needed to acquire subsequent inquiries as needed to acquire audit information.audit information.

Subrecipient Monitoring: Subrecipient Monitoring: A-133 Audit Report ReviewA-133 Audit Report Review

MIT’s response to subrecipient’s MIT’s response to subrecipient’s audit status queryaudit status query

Subrecipient Monitoring:Subrecipient Monitoring:A-133 Audit Report ReviewA-133 Audit Report Review

For the subrecipients that are not subject to For the subrecipients that are not subject to an OMB circular A-133 audit, employ the an OMB circular A-133 audit, employ the most cost-effective method of monitoring.most cost-effective method of monitoring.

Subrecipient MonitoringSubrecipient Monitoring: : A-133 Audit Report ReviewA-133 Audit Report Review

MIT’s request for more MIT’s request for more detailed information detailed information

regarding the subrecipient’s regarding the subrecipient’s audit findings and/or audit findings and/or reportable conditionsreportable conditions

Subrecipient Monitoring:Subrecipient Monitoring:A-133 Audit Report ReviewA-133 Audit Report Review

For subrecipients that are identified with a For subrecipients that are identified with a reportable condition, gain an understanding of reportable condition, gain an understanding of relevant findings or questioned costs stated in relevant findings or questioned costs stated in the Federal Audit Clearinghouse and/or the Federal Audit Clearinghouse and/or request a copy of the subrecipients A-133 request a copy of the subrecipients A-133 report with all appendices.report with all appendices.

Subrecipient Monitoring:Subrecipient Monitoring:A-133 Audit Report ReviewA-133 Audit Report Review

Upon receipt of applicable information, evaluate for Upon receipt of applicable information, evaluate for materiality, any findings or questioned costs noted materiality, any findings or questioned costs noted during the above procedures. Consider the impact during the above procedures. Consider the impact of any corrective action plan as well as other related of any corrective action plan as well as other related actions undertaken by subrecipient management. actions undertaken by subrecipient management. Notify the proper Institute administrative departments Notify the proper Institute administrative departments of those findings and questioned costs determined to of those findings and questioned costs determined to have a material impact on Federal awards.have a material impact on Federal awards.

Subrecipient Monitoring: FINANCIALSubrecipient Monitoring: FINANCIAL

Track subrecipient allocations separatelyTrack subrecipient allocations separately Process for review and approval of invoicesProcess for review and approval of invoices

– PI for programmaticPI for programmatic– OSP for administrative/financialOSP for administrative/financial

Reimbursement for disallowancesReimbursement for disallowances Verify cost sharing commitmentsVerify cost sharing commitments

Subrecipient Monitoring: TECHNICALSubrecipient Monitoring: TECHNICAL

Scientific progressScientific progress Invention reportsInvention reports Timely submission of deliverablesTimely submission of deliverables Final reportsFinal reports

REFERENCE DOCUMENTSREFERENCE DOCUMENTS

OMB Circular A-21OMB Circular A-21 OMB Circular A-110OMB Circular A-110 OMB Circular A-133OMB Circular A-133 FDP Subrecipient TemplateFDP Subrecipient Template Catalog of Federal Domestic Assistance Catalog of Federal Domestic Assistance

(CFDA)(CFDA)

QUESTIONS AND COMMENTSQUESTIONS AND COMMENTS

WEB SITESWEB SITES

FDP Homepage: FDP Homepage: http://TheFDP.org/FDP Subaward Demonstration Project:FDP Subaward Demonstration Project:FDP Subaward Agreement FormsFDP Subaward Agreement Forms

Lists of Parties Excluded from FederalLists of Parties Excluded from FederalProcurement & Nonprocurement Programs Procurement & Nonprocurement Programs http://www.arnet.gov/epls/

Federal Audit Clearinghouse: Federal Audit Clearinghouse: http://www.harvester.census.gov/sac/

MIT Office of Sponsored Programs: MIT Office of Sponsored Programs: http://web.mit.edu/osp/wwwhttp://web.mit.edu/osp/www