Sub-Awards / Sub-Recipient Monitoring

Effective Date: 6/1/14

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Table of Contents

Overview of the Sub-Recipient Monitoring Process
Forms/Websites
Sub-Recipient Monitoring Policy
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OVERVIEW OF THE SUB-RECIPIENT MONITORING PROCESS

1. Proposal Submission

2. Award of the Grant

3. Invoicing by the Subrecipient/Payment for Services 

4. Risk Assessment and Monitoring

5. A-133 Single Audit Monitoring

5.1 Resolving Audit Findings 

FORMS/WEBSITES

• PI: Check Request (xls)
• ORSP: Subrecipient Risk Assessment (.xls)
• ORSP: Excluded Parties List (EPLS) - System for Awards Management (www.sam.gov) 
• TUC-SP: Notification of Subrecipient of A-133 Audit Requirement
• TUC-SP: Request to Subrecipient for Certification of A-133 Audit
• TUC-SP: Federal Audit Clearinghouse (FAC) (https://harvester.census.gov/facweb/Default.aspx)
• TUC-SP: Review Sub-recipient's Single Audit Report
• TUC-SP: First Notification and Questionnaire for Subrecipient Monitoring

SUB-RECIPIENT MONITORING POLICY

1. Responsibilities

1.1 Responsibilities of the Principal Investigator (PI)

1.2 Responsibilities of the Office of Research & Sponsored Programs (ORSP)

1.3 Responsibilities of The University Corporation-Sponsored Programs (TUC-SP)

2. Determination of Sub-Recipient

2.1 Code of Conduct / Conflict of Interest

2.2  Definition of a Sub-Recipient

2.3  Definition of a Vendor

2.4  Judgment in Making Determination

2.5  Importance of Making the Proper Determination

2.6 For-Profit Sub-Recipient

2.7 Sub-Recipients under Federal Contracts (Not Grants)

2.8 Debarment/Excluded Parties

3. Internal Notification 

4. Notification of Subrecipient

5. Risk Assessment/Classification of Subrecipient

6. Monitoring

6.1 Responsibility of Monitoring

6.2 Monitoring Support

6.3 Documentation

6.4 Level of Monitoring Required According to Assessed Risk

6.5 Monitoring Procedures

6.6 Audits

6.7 Monitoring of Sub-Recipients not subject to A-133

7. A-133 Audit Monitoring

7.1 Request A-133 Audit Reports

7.2 Review Audit Reports

7.3 No Audit Findings

7.4 Resolving Audit Findings

 7.5 No A-133 Certification is Submitted by the Subrecipient

 7.6 A-133 Not Complete

 7.7 Not Subject to A-133

8. Adjustments of Unallowable Expenditures

9. Sub-Recipient Record Retention

1. Responsibilities

The ultimate oversight responsibility for sub-recipients remains with the Principal Investigator (PI). The University Corporation - Sponsored Programs (TUC-SP) and the Office of Research and Sponsored Projects (OSRP) will assist the Principal Investigator (PI) in conducting an effective monitoring process. Under certain circumstances the campus auditor and/or a professional audit firm may be asked to conduct an audit of the sub-recipient.

1.1 Responsibilities of the Principal Investigator (PI)

The PI has the ultimate oversight responsibility for the sub-recipients. The PI will:

• Determine whether the proposed entity is qualified to perform the work

• Negotiate the scope of work and financial compensation of the agreement

• Determine whether the proposed contractual agreement is a sub-award (jointly with ORSP during the proposal stage);

• Monitor the sub-recipient’s technical and programmatic activities as they relate to the sub-agreement;

• Monitor the sub-recipient's periodic progress reports;

• Verify the sub-recipient has completed the scope of work in both a timely and satisfactory manner;

• Ensure that sub-recipient invoices are submitted in a timely manner, are approved and forwarded to TUC-SP;

• Monitor invoices from the sub-recipients to ensure that they are reflective of progress;

• Request the assistance of TUC-SP, the CSUN-Campus auditor, and external auditors for support;

• Ensure the sub-recipient's compliance with the terms of the contract;

• Maintain regular contact with the subrecipient;

Non-compliance with technical reporting requirements or dissatisfaction with level of sub-recipient progress should be reported immediately to OSRP and TUC-SP. The PI should contact TUC-SP for questions and assistance regarding the allowability of costs and other financial matters.

1.2 Responsibilities of the Office of Research & Sponsored Programs (ORSP)

• Determine  whether the proposed contractual agreement is a sub-award (jointly with the PI during the proposal stage)
• Determine if the potential sub-recipient has been suspended or debarred from doing business with the federal government, using the Excluded Parties List (EPLS)
• Conduct the risk assessment of the sub-recipient using the Subrecipient Risk Assessment (.xls) form prior to the final execution of the sub-award;
• Execute the subaward agreement with the subrecipient;
• Communicate requirements of the awarding agency to the subrecipient;
• Notify the PI and TUC-SP of the result of the risk-assessment;
• Work with the PI and TUC-SP to address any issues related to the subaward;

1.3 Responsibilities of The University Corporation-Sponsored Programs (TUC-SP)

• Confirm that a sub-award is allowable under the sponsored project;
• Enter subrecipient into the monitoring spreadsheet;
• Assist the PI in reviewing subrecipient invoices to ensure costs are allowable, allocable and reasonable, and are appropriate for the approved budget and the terms and conditions of the sub-agreement;
• Notify the subrecipient of the requirements for an A-133 audit;
• Request the most recent certification of the A-133 audit;
• Review the submitted A-133 audit certification;
• Review audit report on the Federal Audit Clearinghouse (FAC) database (https://harvester.census.gov/facweb/Default.aspx) website using the Review Sub-recipient's Single Audit Report form;
• Follow-up with the subrecipient in cases of audit findings;
• Collaborate with ORSP and PI to revise the risk assessment after audit findings;

2. Determination of Sub-Recipient

The determination of the potential need for a sub-award to a business/organization is usually made at the proposal stage. The Principal Investigator identifies the scope of work to be performed by the potential sub-awardee and must be prepared to justify the selection.


2.1 Code of Conduct / Conflict of Interest
When selecting a potential sub-awardee, the Principal Investigator should be aware of the 'Codes of Conduct' section (Subpart C.42) of OMB Circular A-110 ("Uniform Administrative Requirements for Grants and Agreements for Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations") which states the following:

2.2  Definition of a Sub-Recipient

A sub-recipient serves as a co-investigator, is responsible for the end results of the research effort equally with the principal investigator where federal funds are being passed through to another entity. A sub-recipient:

• Has its performance measured against whether the objectives of the Federal program are met;
• Determines who is eligible to receive what federal financial assistance;
• Has responsibility for programmatic and/or administrative decision making;
• Has responsibility for adherence to applicable Federal program compliance requirements; and
• Carries out a program of the organization as compared to providing goods or services for a prime recipient

A subrecipient is required to meet various federal regulatory and compliance regulations in accordance with OMB Circular A-133. As recipient, The University Corporation is required to monitor the compliance.

2.3  Definition of a Vendor

A vendor is responsible for providing goods or services necessary to conduct the research effort. A vendor is not responsible for the research results. A vendor:

• Provides the goods and services within normal business operations;
• Provides similar goods or services to many different purchasers;
• Operates in a competitive environment; (i.e. competes with others who can provide a similar service)
• Provides goods or services that are ancillary to the operation of the Federal program; and
• Is not subject to compliance requirements of the Federal program

A vendor is only required to meet the terms of the procurement contract and the OMB Circular A-110 requirements. Compliance requirements do not pass through to vendors.

2.4  Judgment in Making Determination

There may be unusual circumstances or exceptions to the listed characteristics. In making the determination of whether a subrecipient or vendor relationship exists, the substance of the relationship is more important than the form of the agreement. It is not expected that all of the characteristics will be present and judgment should be used in determining whether an entity is a subrecipient or vendor.

2.5  Importance of Making the Proper Determination

It is important to be aware that it is the nature of the relationship that determines whether or not an entity is a subrecipient or a vendor. The dollar amount of the purchase order or subcontract is not a determining factor. A careful review of the nature of services to be provided and an appropriate determination as part of the proposal budget review process will eliminate such post award problems as:

• Obtaining sponsor prior approval for unbudgeted subcontracts;
• Delays in processing requisitions for purchased services budgeted as subcontracts;
• Meeting audit and compliance requirements with for-profit organizations where a vendor relationship should exist

By making a proper determination in the proposal stage, the appropriate relationship can be established from the start. This is especially true for an unbudgeted subcontract. If the unbudgeted subcontract is of a subrecipient nature, sponsor approval is required prior to entering into a subcontract. If it is a vendor relationship, no sponsor approval is required unless specified in the award terms and conditions. Making the determination is also important to the vendor or subrecipient. Additional auditing requirements and other compliance regulations apply if the subcontractor is a subrecipient. It is best to make the determination at the proposal stage so if a subrecipient relationship exists, that relationship is recognized by the awarding agency and approved in advance. It is unlikely that an unplanned subrecipient relationship would arise in the course of a sponsored research effort. If this occurs, sponsor approval is required.

2.6 For-Profit Sub-Recipient

Since the requirements for non-profit sub-recipients do not apply to for-profit sub-recipients, the pass-through entity is responsible for establishing requirements, as necessary, to ensure compliance by for-profit sub-recipients. The contract with the for-profit sub-recipient should describe applicable compliance requirements and the for-profit sub-recipient's compliance responsibility. Methods to ensure compliance for federal awards made to for-profit sub-recipients may include pre-award audits, monitoring during the contract, and post-award audits.

2.7 Sub-Recipients under Federal Contracts (Not Grants)

In order to establish a subrecipient relationship under federal contracts it is important that the contractor not subcontract technical or scientific work without the contracting officer's advance knowledge (Federal Acquisition Regulation-FAR 35.009). During the negotiation of a cost-reimbursement R&D contract, the contracting officer must obtain complete information concerning the contractor's plans for subcontracting any portion of the experimental, research, or development effort." Thus, if a subrecipient relationship is not approved as part of a proposal submitted to the agency, written sponsor approval would be required before any unbudgeted subrecipient subcontract could be established.

2.8 Debarment/Excluded Parties

Before entering into a sub-award agreement, ORSP will check on the Excluded Parties List (EPLS) to determine if the potential sub-recipient has been suspended or debarred from doing business with the federal government.

3. Internal Notification 

4. Notification of Sub-Recipient

• Within 90 days after the entry into the Subrecipient Monitoring List, TUC-SP will notify the subrecipient in writing of his responsibilities;
• After the end of the fiscal year, TUC-SP will request a certification from the subrecipient, regarding the A-133 audit, and if applicable request a copy of the audit report;

5. Risk Assessment/Classification of Subrecipient

The Director of Research & Sponsored Projects at ORSP or his designee will conduct the risk assessment using the Subrecipient Risk Assessment (.xls) form prior to the execution of the sub-award. The following factors will be included in the consideration:

6. Monitoring 

6.1 Responsibility for Monitoring

The Principal Investigator has the responsibility, on an ongoing basis throughout the life of the award, to monitor the activities of sub-recipients in accordance with the governing agreement, to assure that awarded funds are used for authorized purposes in compliance with the provisions of the agreement, and to ensure that performance goals are met.

6.2 Monitoring Support

The Principal Investigator may request the support of TUC-SP regarding financial and compliance issues related to the sub-award. In case of significant findings or suspicion of fraudulent activities, the PI may also request the assistance of the campus auditor, or employ an external audit firm.

6.3 Documentation

The Principal Investigator should document all monitoring activities and maintain the documentation in his/her records for potential review by auditors.

6.4 Level of Monitoring Required According to Assessed Risk

Based on the risk assessment conducted by ORSP, the following monitoring activities are conducted:

6.5 Monitoring Procedures

Discretionary audits of sub-recipients are an acceptable monitoring procedure under federal regulations, and all of the subrecipient agreements contain "right-to-audit" clauses. Formal audits are usually performed if there are suspicions of fraudulent activities or lack of compliance. The Principal Investigator should contact the Office of Research and Sponsored Projects (OSRP) and The University Corporation to before conducting an audit. In case of significant findings or suspicion of fraudulent activities, the PI may also request the assistance of the campus auditor, or employ an external audit firm.

Because A-133 does not apply to foreign or for-profit sub-recipients, The University Corporation may establish its own requirements, as necessary on an individual basis, to ensure compliance by such sub-recipients. The PI should consider using sub-recipient monitoring techniques similar to those used for entities that are subject to A-133. Contracts with foreign or for-profit sub-recipients should describe applicable compliance requirements and responsibilities. Methods to assess compliance with federal sub-awards made to foreign or for-profit sub-recipients may include pre-award audits, and on-site visits. In addition, sub-recipients that are not subject to A-133 may be asked to submit supporting documentation in the form of original receipts, copies of payroll records, audits, etc. if circumstances warrant.

7. A-133 Audit Monitoring

The Single Audit Act of 1984 and amendments (31 USC 7101-7105), Office of Management and Budget (OMB) Circular A-110, and OMB Circular A-133 require The University Corporation as recipient of federal funds to ensure that sub-recipients comply with federal audit requirements. Sub-recipients exceeding a pre-determined threshold ($500k; as of 1/1/2015: $750k) of total federal funds received from all projects are required to have a single audit of their operation and their federal projects conducted. 

7.1 Request A-133 Audit Reports

TUC-SP will

• Notify the subrecipient of the requirements for an A-133 audit within 90 days after the execution of the subaward;
• Request the most recent certification of the A-133 audit within 90 days after the end of the subrecipient's Fiscal Year;
• Enter the notification and the request in the subrecipient monitoring spreadsheet and monitor the sub-recipients' compliance with the request for certification;

7.2 Review of the A-133 Audit Reports

After receiving the auidt reports, TUC-SP will

• Review the submitted A-133 audit certification for audit findings;
• Verify the audit certification on the Federal Audit Clearinghouse (FAC) database (https://harvester.census.gov/facweb/Default.aspx) website
• Complete the Review Sub-recipient's Single Audit Report form based on the provided audit report or on the filing at the Federal Audit Clearinghouse (FAC);

7.3 No Audit Findings

In case the subrecipient's A-133 audit certification and the review of the Federal Audit Clearinghouse database determine that the subrecipient had no audit finding related to the subaward, TUC-SP will file the A-133 audit certification in the subrecipient file folder and mark the subrecipient monitoring spreadsheet.

7.4 Resolving Audit Findings

In case of an audit finding related to the subaward, TUC-SP will:

• Follow-up with the subrecipient
• Request a complete audit report and the corrective action plan submitted
• Request assurance/evidence from the sub-recipient that corrective action efforts have been implemented

• The effectiveness and implementation of the subrecipient's corrective action cited in the response to the audit finding (this may involve on-site monitoring)
• Ensure that internal controls at the subrecipient are in place
• If applicable, determine the allowability of costs by the subrecipient and adjust charges to TUC's records
• File all relevant documentation in the subrecipient file folder and mark the information in the subrecipient monitoring spreadsheet

• Review the risk assessment for the subrecipient, decide on additional monitoring activities,
• If necessary modify/terminate the subaward

 7.5 No A-133 Certification is Submitted by the Subrecipient

In case the the sub-recipient doesn't submit an audit certification to TUC-SP within 9 months after the end of the subrecipient's fiscal year, TUC-SP will:

• Review the posting on the Federal Audit Clearinghouse (FAC) database (https://harvester.census.gov/facweb/Default.aspx) website for audit findings;
• Print out the audit report, if available;
• File all relevant documentation in the subrecipient file folder and mark the information in the subrecipient monitoring spreadsheet;
• In case of audit findings proceed according to the above procedure;
• In cases of the sub-recipient's continued unresponsiveness, or inability or unwillingness to conduct required audits, OSRP and TUC-SP may consider taking appropriate sanctions, up to the cancellation of the subaward;

7.6 A-133 Not Complete

In case the sub-recipient's Single Audit is not complete within 9 months, TUC-SP will:

• Request planned completion date from subrecipient;
• Mark the information in the subrecipient monitoring spreadsheet as pending;
• Once the completion date specified has past, follow up with the sub-recipient;

7.6 Sub-Award Not Subject to A-133

If the sub-recipient is not subject to a Single Audit (For-Profit/Foreign Entity) TUC-SP will mark the information in the subrecipient monitoring spreadsheet

8. Adjustments of Unallowable Expenditures

Expenditures invoiced by the sub-recipient, which are determined by TUC as unallowable prior to payment, will not be reimbursed to the sub-recipient.

Expenditures already paid to the sub-recipient, which are determined by TUC as unallowable, must be removed from the project via a Cost Transfer. The TUC-SP Compliance Analyst will initially transfer the unallowable cost to the TUC Sponsored Programs Reserve. The liaison will then work with the PI to either request reimbursement from the subrecipient or determine a non-sponsored programs source to reimburse the reserve.

9. Subrecipient Record Retention

Sub-recipient documentation will be retained in a manner consistent with The University Corporation's Record Retention Policy.

 
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The requirements listed in this policy are not exhaustive of all compliance requirements. In addition to the elements noted above, there may be additional sponsor- or program-related requirements that mandate collecting and documenting other assurances (e.g., on lab animals, human subjects, biohazards, etc.) during the course of the project.

Contact Information

Office of Research and Sponsored Projects (ORSP)
Shirley Lang
Assistant Director
(818) 677-2901
shirley.lang@csun.edu
Mail Stop: 8232

The University Corporation, Sponsored Programs (TUC-SP)
Mahyar Sadri
Sponsored Programs Analyst - Administrative Compliance
(818) 677-6414

Mail Stop: 8309