Subrecipient Monitoring

Policy statement and procedures Adopted August 2008

Policy Statement

The University will follow the requirements of the Office of Management and Budget (OMB) the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, known as the Uniform Guidance or 2 CFR 200 and other applicable federal regulations with respect to monitoring its subrecipients of federal awards.

Reason for Policy

The University is accountable for responsibly entering into research subcontracts and for appropriately monitoring those subrecipients. For subrecipients who expend $500,000 or more per year of federal awards, the University will also comply with the audit requirements of Single Audit (formerly A-133). There are specific financial and administrative regulations governing the management of federal grants and contracts. As such, subrecipients with whom the University contracts to work on federal grants and contracts are also governed by the same regulations. Penalties for noncompliance include adverse audit findings, financial liabilities on current and past awards and loss of eligibility to receive future awards.

Procedures

A subagreement may be either a subcontract or a subgrant, each of which is an agreement between the University and a third party, to transfer a portion of the University’s obligations on a sponsored project to that party. The third party in these cases is also known as a subrecipient.

A simple vendor of goods or services differs from a subrecipient in several ways. See Appendix A for help determining if a third party is a vendor or a subrecipient. This policy does not apply vendor relationships.

The University will use the following procedures for its subrecipient compliance:

Subrecipient Identification

• During normal proposal preparation, the Office of Sponsored Programs (OSP) will assist the principal investigator (PI) with such subagreement/consortium arrangements.
• The PI must review potential subrecipients for their capacity to perform the scope of work and confirm that subrecipients are not excluded from receiving federal funds (i.e., use the Excluded Parties List System). Potential subrecipients must provide their federal representations, certifications and assurances along with their portion of the project narrative, budget and budget justification to be included in the proposal. The OSP will retain the certifications and budget information obtained as part of the proposal file.
• When the proposal is accepted and funded, the sponsor agrees that the subrecipient is an acceptable component of the project. The OSP will prepare an award letter for the PI and carbon copy the grants accountant.

Subrecipient Contract Creation

• PIs can engage in preliminary discussions with the subrecipient, but they cannot speak for the University or enter into agreements on their own. The PI must follow the University’s Administration and Operations Manual policies (i.e., Policy 2.09, Federal, State or Other Sponsored Program Support and Policy 1.12, Conflict of Interest) and leave the formal negotiation process and the review of proposed agreements to the appropriate University officials. Subagreements that originate with federal funding are routed through Contracts and Purchasing. All agreements are for one grant budget year only.
• The PI will complete the Subrecipient Contract questionnaire (to be created) instead of the standard Purchase Order Requisition form. The completed questionnaire should be approved by the PI and, if required due to the dollar amount, signed by the dean and provost.
• Once Contracts and Purchasing receives the approved questionnaire, a purchase order and contract (based on the standard template) will be created. The purchase order and contract will be given to the director of Business and Support Services for review and approval. Three copies of the contract are created, signed by the director of Business and Support Services, and then routed to the OSP for the PI’s signature.
• The director of Business and Support Services will then forward the three signed contracts to the subrecipient. The subrecipient will return two of the originals of the fully executed contract. One original will be retained by the director of Business and Support Services. The other will be retained by the controller. Copies will be provided to the PI by Contracts and Purchasing.

Subrecipient Contract Monitoring

The PI is responsible for monitoring the subcontractor’s post-award performance and costs. The PI must monitor the subrecipients to ensure that performance goals are achieved and, to the extent possible, that they are administering the federal awards in compliance with laws, regulations and the provisions of contracts or grant agreements.

The PI is also responsible for obtaining invoices from the subcontractors per the timelines established in the contract. The PI must review all invoices from subcontractors and attest that performance is satisfactory and on schedule prior to the University making payment. Invoices from for-profit subcontractors must identify the names and titles of all persons for whom direct labor is charged. The PI must note his/her approval by signing the invoice.

The Finance Office will work closely with the PI to ensure that invoices are charged to the appropriate contract. On a quarterly basis, the grant accountant will send the PI a schedule of payments made on the existing contracts. The PI and grant accountant will determine a plan to address delinquent bills.

Before final payment is made, PIs must certify that the subrecipient has provided Gallaudet University everything necessary to meet sponsor requirements for formal closeout. For example (as may be applicable) the PI will compile the subrecipient’s final report, invoice, property inventory report and patent disclosure statement; subrecipient’s release; subrecipient’s assignment of refunds, rebates, credits and other amounts; and subrecipient’s certification of compliance with the audit requirements as required by 2 CFR 200, “Single Audit”, (Formerly A-133 or A-128 Audits).

Subrecipient Contract Maintenance

If the PI decides to renew the subrecipient agreement, the Subrecipient Contract questionnaire must be completed again. The same process as above holds, with the addition that the controller must also sign the request. By signing the questionnaire, the controller indicates that subrecipient auditing (see below) was conducted, and the subrecipient has been cleared for contract renewal.

Subrecipient Audits

The Finance Office will monitor subrecipients through their Single Audit report certification. On an annual basis, the Finance Office will request copies of the Single Audit report certification from each subrecipient.

• Single Audit requirements state that annual audits be completed within nine months of the end of the subrecipient’s audit period. Consequently, certification letters must be prepared by the Finance Office and distributed to every subrecipient working on any externally sponsored award. The certification letters must be prepared and distributed annually by April 30 of each year requesting information about the subrecipients’ most recent completed fiscal year. The certification letters require the subrecipient organization to state the information they are providing fairly presents the standing of the organization in all material aspects and one of the following:
  • They are not subject to the requirements of Single Audit, because the organization did not receive $500,000 or more in federal awards during the fiscal year, is a for-profit corporation or is a non-U.S. based entity.
  • They are subject to the requirements of Single Audit; the audit has been completed; and there were no material conditions of noncompliance with federal regulations and no findings related to any subaward(s) from Gallaudet University. Accordingly, a copy of the audit report is not required.
  • They are subject to the requirements of Single Audit; the audit has been completed; material weakness, material instances of noncompliance, or findings related to any subaward(s) from Gallaudet University were noted. Accordingly, a copy of the audit report must be enclosed.
  • They are subject to the requirements of Single Audit, but the audit has not been completed.
• Follow-up requests will be made to ensure that subrecipients send reports:
  • Should no response to the certification letter be received by the Finance Office within 45 days, a second certification letter will be sent. Should no response to the second letter be received by the Finance Office within 30 days, the subrecipient will be contacted by telephone.
  • If reports are not received, the Federal Audit Clearinghouse (FAC) Internet data dissemination system will be used to retrieve audit report information from the FAC database. This information will be reviewed to determine if an organization has any reportable conditions and/or audit findings required to be reported under Single Audit, subpart F, §200.516
  • Should attempts continue to be unsuccessful, the controller in conjunction with the PI and the OSP will consider sanctions against the subrecipient, including termination of the subcontract.
  • The Finance Office will review all available information for compliance issues pertaining to funds from Single Audit report certification. The controller will be notified of any compliance issues that pertain to funds passed through the University and will request corrective action plans from the organization to determine if proper action has been implemented.
• Management will determine corrective action on deficiencies identified in audits and subrecipient monitoring.

The monitoring of subrecipients that are not subject to Single Audit requirements will not necessarily follow all procedures described in this policy. Instead monitoring will be based upon management’s assessment of such factors as the size of the award, percentage of the total program’s funds awarded to the subrecipient, budget adherence, any issues identified in the pre-award review and other matters as deemed necessary.

Forms/Instructions

• Subrecipient Contract Questionnaire
• Subrecipient Contract Template
• Standard Certification Letter

Related Information

External Resources

• OMB 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

Internal Information

• Gallaudet University Administration and Operations (A&O) Manual

Definitions

Terms	Definition and Examples
Subcontract/Subgrant	Award made to a subrecipient when the prime award is in the form of a contract.
Subrecipient	A nonfederal entity that expends federal awards received from a pass-through entity to carry out a federal program, but does not include an individual that is a beneficiary of such a program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency.

Responsibilities

Role	Responsibility
Principal investigator (PI)	Identify and screen potential subrecipients. Prepare Subrecipient Contract questionnaire. Review subrecipient performance and costs. Work with the Finance Office to address delinquent billing, as needed.
Office of Sponsored Programs	Assist PI with proposal development in relation to subagreement/consortium arrangements and collection of proposal components from subrecipient. Collect subrecipient representations, certifications and assurances.
Office of Contracts and Purchasing	Review the Subrecipient Contract questionnaire for proper approval. Create the official purchase order and contract. Forward the Gallaudet-signed contracts to the subrecipient.
Department head	Establish effective processes and controls to ensure compliance with this policy. Communicate these practices to all responsible employees within the department.
Dean/Provost	Establish effective processes and controls to ensure compliance with this policy. Communicate these practices to all responsible employees within the departments.
Finance Office	Establish effective processes and controls to ensure compliance with this policy. Monitor annually the SINGLE AUDIT (FORMERLY A-133) certifications of subrecipients. If necessary, determine appropriate corrective action plans. Approve subrecipient status for contract renewal.
Vice President of Administration and Finance	Establish effective processes and controls to ensure compliance with this policy.

Appendices

Appendix A: Subrecipient versus vendor determination

History

Origination date: August 2008 Last amended date: May 2020Next review date: