A-133 and Sub-Recipient Monitoring

A-133 and Sub-Recipient
Steve Birkhofer
A-133 and Sub-Recipient Monitoring
• Colleges & Universities benefited greatly from the more than
$500 bil in grants awarded in FY 2012 to various non-federal
entities. The Single Audit Act of 1984 (amended in 1996,
revised 2003 & 2007) and OMB A-133 provide audit
guidelines applicable to colleges and universities to ensure
that these funds are expended properly.
• All non-federal entities that expend more than $500K in
federal awards annually are required to obtain an annual
audit in accordance with the Single Audit Act and OMB A133. Either a single or Program-Specific audit is allowable.
• Non-Federal entities that expend awards exceeding $500K
in a year are subject to Single Audit guidelines but may elect
a ‘program-specific’ audit if funding was received from one
Federal program/agency or pass-through entity.
A-133 and Sub-Recipient Monitoring
• Audits should occur annually. The audit should be completed
within nine (9) months of the end of the ‘auditee’s fiscal year or
30 days of release of ‘auditee’s audit report.
• Audit costs are generally allowable charges to Federal awards
(per OMB and FAR cost principles).
• Audit costs resulting from limited–scope procedures performed
against an ‘auditee’ receiving less than $500K may also be
allowable as long as AICPA attestation of GAAS procedures
are applied.
• Pass-through entities have management responsibility in
resolving audit issue findings resulting from Fed awards it
completes to its subrecipients.
• Limited scope and program specific audits typically will not
evaluate a subrecipient’s complete financial statements nor
result in producing an opinion of the financial statements or
define deficiencies in internal control. Should be cost effective
and determine allow-ability of spending.
A-133 and Sub-Recipient Monitoring
• Subrecipient: means a non-Federal 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. Guidance on distinguishing between a
subrecipient and a vendor is provided in §___.210.
• Regarding for-profit subrecipients, the pass-through entity is
responsible for establishing requirements, as necessary, to
ensure compliance by for-profit subrecipients. The contract
with the for-profit subrecipient should describe applicable
compliance requirements and the for-profit subrecipient's
compliance responsibility. Methods to ensure compliance for
Federal awards made to for-profit subrecipients may include
pre-award audits, monitoring during the contract which may
include a site visit, and post-award audits.
A-133 and Sub-Recipient Monitoring
• Determining Sub-recipient eligibility (non-ARRA awards),
consistent with Transparency Act (FFATA) requirements:
– Is ‘sub’ registered in ‘System Award Management’
(previously Central Contractor Registration). Requires valid
DUNS number. See www.SAM.gov
– Review databases for audit filings including:
• Federal Audit Clearinghouse (http://harvester.census.gov)
• State agencies, including NC State Auditor’s Office,
maintain on-line databases with current audit filings (see
www.ncauditor.net for NC related agencies).
• Review Suspension of Funding List (SOFL) maintained
by NC OSBM for non-compliance (www.NCGrants.gov)
• Broader compliance violations may be found at Dept of
Homeland Security site www.ecustoms.com
A-133 and Sub-Recipient Monitoring
– Prime awardee should also perform a risk assessment
beyond any audited financial reporting before completing
a sub-award including:
• Sub’s governing internal controls and control
environment. Is sub subject to A-133?
• Size and complexity of proposed sub-award.
• Additional guidance see financial research
administration resources available through NCURA at
• History of non-compliance or failure to use funds for
authorized purpose.
• Proposed method of re-imbursement to subrecipient. If
Fixed Price, ‘sub’ assumes greater risk by having to
assuming clearly defined deliverables. If CostReimbursement, prime awardee assumes greater risk
in restricting reimbursements to defined delivery plan.
A-133 and Sub-Recipient Monitoring
Understanding Risk:
Simple Program
e.g., R03
Basic Program e
e.g., R01
Complex Program
e.g., Center Grant
Low % of Awards Passed
Through Subrecipient
Standard % of Awards Passed
Through Subrecipient
High % of Awards Passed
Through Subrecipient
Small Award
Standard Award
Large Award
Long History with Subrecipient
Some History with Subrecipient
No History with Subrecipient
No Compliance Problems
Responsive to Minor
Compliance Issues
Known History of Compliance
Copyright © 2008 NCURA
A-133 and Sub-Recipient Monitoring
Risk Assessment Exercise
Evaluate each case study and complete a risk
analysis matrix for each one to determine if the
subrecipient might be considered low, medium or
high risk.
Are there any special considerations needed?
What controls might you put in place?
Copyright © 2008 NCURA
A-133 and Sub-Recipient Monitoring
• Pass-through entities responsibilities in managing Federal
awards distributed to sub-recipients:
– Advise the ‘sub’ on requirements imposed by Federal law and
determine level of subrecipient risk for monitoring.
– Monitor ‘sub’s’ activities to provide reasonable assurance Fed
funds used for authorized purpose (compliance).
– Examine process for review&approval of sub’s invoices to prime.
Suspend payments if technical & financial reporting delinquent.
– Require ‘sub’ to allow pass-through entity access to financial
statement and records as needed for compliance.
– Examine technical progress, e.g. deliverables, final report, et al
– Issue a Management Decision within six months of receipt of
sub’s audit report (where questionable costs are identified) and
ensure corrective action resolution.
– Seek auditor assurance related to documentation in an effort to
minimize costs and define any disallowed costs, et al, to be repaid
by auditee with repayment timetable.
A-133 and Sub-Recipient Monitoring
• Pass-through entities responsibilities in managing Federal
awards distributed to sub-recipients (continued):
– Material Findings and questioned costs should be addressed
to proper administrative departments.
– Audit results should be made available to cognizant or
funding Federal agency.
– Require annual attestation confirming ‘sub’s’ compliance with
A-133 reporting requirements. If ‘sub’ not subject to A-133
audit requirement, require attestation in writing.
– Primary awardee should upload sub-awards (grants,
contracts, coop agreements) exceeding $25K to the FFATA
(Transparency Act) Subaward Reporting System (FSRS)
within 30 days of the sub-award. The reporting should follow
information provided by the ‘sub,’ including names of top
officers, sub’s location, award amount, etc.
– Sub-recipients with gross income < $300K in most previous
year are exempt from FFATA reporting.
A-133 and Sub-Recipient Monitoring
• Sub-Award Monitoring at Close-out:
Verify fulfillment of any cost-sharing requirements
Verify receipt of invoice marked “Final”
Obtain all final reports (including property reports)
Obtain signed Refunds, Rebates, Credits Form (if
Verify clear understanding about record retention
Audit subaward (if necessary)
Verify Subrecipient is not debarred or suspended
Verify that Subrecipient has filed an audit report (or
equivalent) through subaward end date
Adjust Pass-through entity’s records if necessary to
reflect changes in subaward costs
A-133 and Sub-Recipient Monitoring
Recent Settlements pursued by the Office of Inspector General
Univ of Massachusetts Medical School (UMMS) & Yale Univ
• Key elements of complaint
– NIH Award to UMMS
– UMMS issued subaward to Yale University
– Audit report alleges that Yale claimed $193,779 in costs that did not
comply with OMB Circular A-21 and the terms of the subgrant.
• Because Yale received its funds through a subgrant from UMMS rather
than directly from NIH, audit recommended under separate cover that
UMMS reimburse NIH for unallowable subgrant costs totaling
• Yale currently under federal investigation
George Washington University
• Payments made to fake subcontractors
• GWU agreed to $1.8 million settlement with DOJ
Copyright © 2008 NCURA
• Former PI stole nearly $1 million was sentenced to prison
A-133 and Sub-Recipient Monitoring
University of Puerto Rico (UPR)
• Key elements of the complaint
– The audit found $16,000 in questioned subawardee
costs and that UPR’s internal controls for subawardee
costs are lacking.
– Two subawardees were unable to provide adequate
supporting documentation and one subawardee
duplicated billing for indirect costs.
– Subawards were not adequately monitored because
UPR’s policies and procedures did not include a riskbased system for monitoring and reporting subaward
• UPR agreed with the findings and is launching a new
subrecipient monitoring system.
Copyright © 2008 NCURA
A-133 and Sub-Recipient Monitoring
University of Florida (Sept 20, 2011):
The University of Florida plans to repay more than $192,000 in grant
funding to the National Institutes of Health because of prematurely
destroyed records, possibly falsified overtime hours and questionable
charges found through internal audits of a university institute.
– UF's Office of Audit and Compliance Review conducted two audits in
2010 that identified problems with the Jacksonville-based Addictive
and Health Behavior Research Institute's use of NIH research funding.
– UF subsequently closed the institute, and its director, Chudley Werch,
resigned last September as part of a settlement agreement with the
university. UF relinquished $1 mil in related funding as a result.
– The Florida Auditor General identified "severe deficiencies" in UF's
accounting of the spending of several federal research awards. The
U.S. Department of Health and Human Services now is conducting an
investigation into UF's financial and accounting practices on federal
– Note: other major program deficiencies at UF have been reported.

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