Subrecipient Monitoring - Community College Internal Auditors

Subrecipient Monitoring
CCIA Spring Conference
Sheena Tran, Rancho Santiago CCD
Tania Walden, Los Rios CCD
Tracy Young, Coast CCD
May 2013
Defining Subrecipients
Regulatory Requirements
Importance of Relationships
Proposed Grant Reform
Is every entity a subrecipient?
There is a difference.
What is a Subrecipient?
• “Entity that expends…awards received from a
pass-through entity to carry out a …
program…A subrecipient relationship exists
when funding from a pass through entity is
provided to perform a portion of the scope of
work or objectives of the pass through entity’s
award agreement with the….awarding
--OMB A-133 §___.105
What is a Vendor?
• “A dealer, distributor, merchant or other seller
providing goods or services that are required
for the conducts of a…program…for example,
supplies, expendable materials, or data
processing services in support of the project
--OMB A-133 §___.105
What’s the Difference?
• Most important factor: substance rather than
• The same organization may have different
relationships with the pass through entity
based upon the grant and/or contract terms
• An organization can be a recipient,
subrecipient and a vendor in three different
grant programs
What’s the Difference? cont
The key difference between a
subrecipient and a vendor is that
subrecipient activities directly
execute the mission, whereas
vendors provide products or
services that indirectly support the
Determine Relationship ASAP
• Identify subrecipient relationships early.
• Early determination is important in the
selection of the subrecipient, and whether the
resulting agreement includes appropriate
terms and conditions that comply with
program requirement
• Responsibilities affect level of oversight
required and impact a program’s integrity and
overall success.
Subrecipient/Vendor Checklist
Subrecipient Contracts
• Include clauses permitting the district and the
funding agency the right to:
– Perform subrecipient reviews
– Request financial statements, and
– Review the subrecipient agency’s records
related to the grant.
So Why Do We Monitor Subrecipients?
• To ensure compliance with requirements
described in OMB A-133
• To verify good business practices are in place
to ensure the authorized agency disburses
federal funds in accordance with grant
Purpose of Review (from OMB A-133)
• Federal award information and compliance
requirements identified to subrecipients
• Subrecipient activities are monitored.
• Subrecipient audit findings are resolved.
• The impact of subrecipient non-compliance is
• The subrecipient obtained the required audits
and took appropriate corrective action on
audit findings.
Best Practices
• Develop a monitoring plan
– Written procedures defining scope and frequency
– Include corrective action follow up
• Create a monitoring schedule
• Develop/implement a monitoring checklist
• Assess risk – i.e., determine factors for
frequency and method of monitoring
Risk Assessment
• Identify appropriate risk indicators, assign a
value or weight
• Evaluate and rank subrecipients and programs
based on relative risk
• Identify available monitoring resources and
staff – weigh against needs
• Adjust monitoring plan, including monitoring
activities and schedule based on risk and
resource assessments.
Risk Indicators
• Size of sub federal award portfolio
• Prior findings: A-133, federal program
monitoring, grantee monitoring
• Program performance
• Change in program scope or activities
• Financial stability
• Complaints
Risk Assessment
• Evaluate subrecipients and programs against
risk indicators
• Rank subrecipients and programs by risk
• Use data analysis and automation to make
process more efficient (large number of subs)
• Perform analysis regularly to account for
changes in risk.
Resource Assessment
• Determine amount and types of resources
needed to monitor subs and programs
• Identify available resources – assign
• Address resource limitations
Monitoring Plan
• Reconcile between need and availability of
• Adjust monitoring schedule based on risks and
available resources
• Schedule technical assistance based on
identified risks.
Risk Indicators
• Program risk
– Complexity
– Percentage of program awards passed through
– Dollar amount of award
• Subrecipient Risk
Dollar amount of award
New recipients
History of non-compliance
New personnel
New or substantially changed systems
Skit #1
Subrecipient Monitoring
• Audited financial statements
• Current organization chart – names and
• Completed Subrecipient Questionnaire
• Supporting documentation for Questionnaire
• Signed Management Certification
• Site visit (as needed)
Subrecipient Monitoring cont
• Based upon results of the documentation
received and the risk assessment, additional
work may be required, including but not
limited to:
– Interviews with key personnel
– Follow up on audit findings
– Testing of grant related transactions
– Assessing compliance with grant and/or contract
• If a subrecipient fails to submit requested
information, funding may be withheld until
information is received.
• Suggest including this verbiage in contract
with subrecipient.
• Internal Auditor Communication and
Relationships – handout
• What to do with an non-responsive sub
• Site visits – building the relationships
• Obstacles to compliance
– Delays
– No response
– Finding the right contact person
Proposed Grant Reform
• Section 501 Subrecipient Monitoring and Management
is created to co-locate guidance on oversight of
subawards that previously was located in different
places in different OMB Circulars.
• To provide greater clarity into the expectations for
subaward oversight across the Federal government.
• Section 502 Standards for Financial and Program
Management and other minor language throughout
the guidance is updated to align the objectives for
performance monitoring and measurement with those
described for Federal agencies in OMB Circular A-11.
Proposed Grant Reform - cont
• Section .501 Subrecipient Monitoring and Management
explicitly requires pass-through entities to either honor the
indirect cost rates negotiated at the Federal level, negotiate
a rate in accordance with Federal guidelines, or provide the
minimum flat rate. Aimed at ensuring that entities who
receive Federal funds primarily indirectly nevertheless are
appropriately reimbursed for the allowable costs associated
with the award.
• Address questions about the required level of subrecipient
oversight, OMB has consolidated and clarified relevant
guidance on subrecipient monitoring requirements in
section .501 Subrecipient Monitoring and Management.
Proposed Grant Reform - cont
• Subrecipient Monitoring—The pass-through entity
– (1) Made sub-awards only to eligible entities,
– (2) identified awards, compliance requirements, and payments
to the subrecipient prior to disbursement,
– (3) monitored subrecipient activities to ensure subrecipient
compliance, and
– (4) performed the audit resolution function (e.g., ensured
proper audit submitted on time, followed up on audit findings,
including issuance of a management decision, and ensuring that
subrecipients took timely and appropriate corrective action).
• Sheena Tran, CPA - Rancho Santiago CCD
– (714) 480-7588
– [email protected]
• Tania Walden, CIA, CBA, MBA - Los Rios CCD
– (916) 568-3083
– [email protected]
• Tracy Young, Coast CCD
– (714) 438-4604
– [email protected]

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