Overview
Policy Purpose
The federal administrative requirements, cost principles and audit requirements, referred to as the Uniform Guidance (UG), includes information on subrecipient monitoring. Pass-through entities such as MSU are required to monitor the activities of subrecipients to ensure proper use of federal funds to meet performance goals. MSU has elected to extend the UG principles to non-federally funded projects for consistency. This page provides information to assist in understanding the federal requirements and in complying with such requirements.
The UG requirements for subrecipient monitoring and management are noted in 2 CFR 200.331.
| Uniform Guidance Requirements |
Compliance Considerations |
| Ensure that the subaward is clearly identified and includes required information. |
Attach prime award, identify in subaward, etc. |
Evaluate subrecipient risk of noncompliance
- Consider specific subaward conditions
- Verify that the subrecipient has a current single audit
|
Complete Risk Assessment Questionnaire, check debarment, require receipts, additional prior approvals, etc. |
Monitor subrecipient activities
- Utilize monitoring tools if appropriate
- Consider adjustments to MSU records
- Consider action against noncompliance
|
PI invoice certification, withhold payments, provide training, on-site visits, reassess risk, etc. |
Acronyms and Definitions
Acronyms
Definitions
Annual risk assessment/debarment. CGA conducts an annual risk assessment and debarment check. Upon review of a pending payment, CGA will update the debarment status and/or re-assess the subrecipient's risk, if expired. A debarment status check is expired after one calendar year and a risk assessment is expired 22 months after the fiscal period end date of the subrecipient’s single audit. If no singe audit is required/received, another date may used.
Typically, a single audit is conducted within 9 months of an entity’s fiscal period end date.
Example:
The subrecipient's fiscal period end date is 6/30/15 (FY15)
The subrecipient's single audit for FY15 will be complete by 3/31/16
The subrecipient's single audit will be available/posted by 4/30/16
MSU assesses the subrecipient risk on 5/15/16 using their most current audit (FY15)
MSU's risk assessment of the subrecipient will be expired by 4/30/17
Contractor. An entity that receives a contract from MSU to purchase property or services needed to carry out the sponsored award. Such contracts are not considered subawards and are therefore, contractors subject to different requirements than subrecipients. Characteristics of a contractor are:
- Provides the goods and services within normal business operations.
- Provides similar goods or services to many different purchasers.
- Normally operates in a competitive environment.
Subaward. An award provided to a subrecipient to carry out part of the award that was received directly by MSU, who acts as a pass-through entity.
Subrecipient. An entity that receives a subaward from MSU, who acts as a pass-through entity, to carry out a part of the sponsored award. MSU is required to flow-down prime award terms and conditions to subrecipients. Characteristics of a subrecipient are:
- Subrecipient will be performing a substantive portion of the project work or other specific project objectives.
- Subrecipient has programmatic decision making responsibilities and applicable compliance obligations.
- Subrecipient uses the funds for a public purpose, as opposed to providing goods/services for their own benefit or the benefit of MSU.
- Subrecipient controls the means and methods they use to accomplish the work objective.
Roles and Responsibilities
MSU’s process for issuing and managing subawards on sponsored program accounts (RC accounts) include responsibilities from both central and departmental offices. The below information is not all inclusive but provides an overview of office roles in MSU’s subaward process. More information related to international subawards can be found at "Roles and Responsibilities Guidance."
Principal Investigator
- Identifies potential subrecipients and approves their scope of work in proposals.
- Responsible for the oversight of all subrecipient activities.
- Monitors the subrecipient activities for compliance with the terms and conditions of the award
- Receives programmatic reports and performance according to the expected work plan.
- Communicates regularly with the subrecipient regarding project related objectives.
- Reviews and approves all payment requests, certifying that work was performed satisfactorily.
- Considers requests from the subrecipient for modifications to subaward, including change in scope of work.
Departmental Administrator
- Obtain all required information/documents from subrecipient.
- Reviews all required supporting expense documentation from subrecipient.
- Initiates payments to subrecipients in MSU’s financial system.
- Acts as a liaison between the subrecipient’s business office and CGA/OSP regarding the subaward, as well as any modifications.
Contract and Grant Administration
- Drafts and executes subaward documents and modifications compliant with prime award terms and conditions for agencies that participate with the Federal Partnership Demonstration (FDP).
- Ensures that required, applicable information is included in the subaward/modification, such as award number, project dates, project title, CFDA number, prime grantor and required flow-down provisions.
- Reviews, and approves if appropriate, subrecipient requests for payment for compliance with applicable terms and conditions.
- Ensures that subrecipient debarment status and risk level are reviewed when expired.
- Acts as the primary point of contact for all audits.
- Reports FFATA information as required.
- Processes changes to the performance schedule and/or scope of work as requested by the PI.
- Follows-up to ensure that the A-133 audit report, an A-133 Certification, UG Single Audit or other applicable documentation is current.
- May conduct financial reviews, desk audits, and in highly unusual situations, on-site audits to monitor subrecipient financial compliance.
Office of Sponsored Programs/Business Connect
- Submits proposals that include subrecipient information.
- Drafts and executes subaward documents compliant with prime award terms and conditions for agencies that do not participate with the Federal Demonstration Partnership (FDP).
- Ensures that required, applicable information is included in the subaward, such as award number, project dates, project title, CFDA number, prime grantor and required flow-down provisions.
- Processes changes to the performance schedule and/or scope of work as requested by the PI.
- Responsible for negotiating and executing FAR based subcontracts.
- Ensures that the appropriate flow-down provisions from the prime federal contract are incorporated into any related subcontracts for property administration and disposition.
Subaward Execution
In most cases, subawards will be listed in proposals, including a subaward budget, justification, scope of work, and signed subrecipient commitment form (Proposing Subawards). A subaward may only be established after the prime agreement between MSU and the awarding agency has been executed. In addition, all required documents must be completed and accepted by OSP/CGA prior to subaward execution. Once fully executed, OSP/CGA will send a copy of the subaward to the PI and department administrator.
Cost Reimbursable v. Fixed Price Subawards
- Cost reimbursable subawards require subrecipients to invoice for actual costs incurred.
- Standard cost reimbursable agreements have the subrecipient submit an invoice to MSU after project costs have been incurred.
- The standard for most federally funded projects
- Used when there is less assurance of a specific deliverable being met
- Allows MSU and the subrecipient more flexibility for cost fluctuations
- Minimizes the risk of compliance violations
- Fixed payment schedules allow the subrecipient to invoice set amounts based on a schedule, not on actual costs incurred.
- Subrecipient is required to submit a final financial report of actual costs and must refund unused payments to MSU after the project end date
- Is typically utilized when required by the sponsoring agency
- Fixed price subawards establish payments by completed deliverable.
- Used when there is a well-defined scope of work and high degree of assurance that the deliverable will be met.
- Costs are assessed for reasonableness prior to subaward execution. Financial reports are not required nor will actual costs be audited during the life of the subaward.
- May be used when work is performed in areas where this is more difficulty obtaining documentation for small expenses and where currency fluctuations are common.
- If anticipated costs increase, the subaward amount will not typically change.
- Fixed price subawards over $150,000 require agency approval when federally funded.
Subaward Advances
At times, it may be necessary to provide the subrecipient with an advance of funds to ensure that work can be performed. Approved advances, as well as the payback schedule which outlines when the subrecipient should reconcile the advance payment(s) with actual costs, should be incorporated into the subaward document. All requests for subrecipient advances must be submitted to OSP/CGA with a business purpose, explaining the necessity and how the requested amount was determined to be appropriate. Depending on the amount of the advance request, additional approvals may be required.
- Requests up to $50,000, when representing 25% or less of the total amount obligated on the subaward, require PI approval.
- Requests from $50,000 to $100,000, when representing 25% or less of the total amount obligated on the subaward, require Chair level approval.
- Requests more than $100,000, as well as those representing more than 25% of the total amount obligated on the subaward, require Dean level approval.
Human Subjects/Animal Use
If the subaward scope of work includes human subjects or animal use, the subrecipient must have the appropriate compliance approvals in place prior to starting the related work. OSP/CGA may ask for documentation to demonstrate that the approval has been received or for certification that the related work is covered under MSU’s approval document.
Subrecipient Monitoring
The level of MSU oversight varies by subrecipient and/or subaward, depending on the relative risk of noncompliance and nonperformance that each subrecipient or agreement presents. MSU subrecipient monitoring procedures include an annual risk assessment of each subrecipient with a current subaward from MSU, as well as an annual debarment verification.
- For Cost Reimbursable agreements to subrecipients, MSU will conduct an annual risk assessment. If the current assessment is expired, MSU will complete an interim assessment prior to making further payments to the subrecipient.
- For Fixed Price agreements to subrecipients, OSP/CGA will conduct a one-time pre-audit prior to executing the subaward, including a review of the budget for reasonableness. Additional support may be requested from the department as needed.
Determination of Subrecipient Risk
MSU will ensure that a current risk assessment has been conducted prior to subaward execution, as well as on an interim basis. MSU will utilize a Risk Assessment Questionnaire to establish the subrecipient risk level and will classify each subrecipient’s risk level as high or low.
- Management of high risk recipients typically will include a requirement in cost reimbursable subawards that the subrecipient provide a copy of all receipts prior to payment, and may involve site visits by the PI and/or other financial personnel.
- Management of low risk recipients may include a requirement in cost reimbursable subawards that the subrecipient provide documentation/receipt copies upon MSU’s request.
Uniform Guidance (2 CFR 200.500) requires that a non-federal entity which expends $750,000 or more of Federal funds in a year shall have a single or program-specific audit conducted for that year. For subrecipients subject to this requirement, MSU will review the audit summary as part of the risk assessment. For subrecipients that are not subject to the requirement, MSU will review other financial documentation provided by the subrecipient as part of their risk assessment. This may include an independent audit report and/or alternate financial information.
Retention of the Subrecipient’s risk assessment, including other applicable documents such as the Subrecipient Commitment Form, A-133 or UG Single Audit report, or other financial information will be maintained in CGA’s central files.
Subaward Specific Factors Impacting Risk
Prior to the execution of a subaward, OSP/CGA will review several considerations to determine the level of oversight to be included in each specific subaward document. For example, subrecipients considered to be low risk may have additional reporting requirements included in their subaward if other high risk factors are present. These factors include, but are not limited to, funding source, type of contracting mechanism, percentage of MSU’s award being obligated to the subrecipient, involvement of human or animal subjects, and past experience.
Debarment Verification
OSP/CGA will ensure that a current debarment check is on file for each subrecipient prior to subaward execution. CGA will do an debarment status verification in Visual Compliance on an interim basis. MSU will not issue federally funded subawards, or will terminate subawards, to subrecipients who are debarred.
Subaward Payments
Subrecipients typically send invoices to the applicable department for review and payment initiation. Department administrators will process a Disbursement Voucher (DV) using the appropriate financial information, including object codes, and will attach the invoice, PI certification, and other documentation required by the subaward, if appropriate.
- Subrecipient’s invoice.
- The invoice should contain the required information as included in the subaward, such as subaward number, period covered by the billed expenses, current and cumulative costs, expense detail per budget category, and cost share.
- A certification signed by an authorized official certifying to the truth and accuracy of the invoice should be included on the invoice.
- PI certification
- The DV should include the following, or a similar statement, certified by the PI: “The services for which reimbursement is requested have been satisfactorily rendered and the costs thereof are proper and due in accordance with the terms of the agreement. If this payment is for an advance, it is in accordance with the terms of the agreement and necessary to further project objectives."
- There are three methods of documenting PI certification.
- The PI can sign a separate document that includes the statement, which can be attached as a note on the DV.
- The statement and PI signature can be added to the subrecipient’s invoice, which should be attached to the DV.
- The PI can personally add a note to the DV that contains the statement.
CGA’s approval is required on all subaward payments on RC accounts. The DVs will automatically route to CGA in MSU’s system, based on the use of the subaward object codes. CGA will review the subaward payment requests for compliance, including but not limited to the following information, when appropriate.
- Information required by the subaward, such as the invoice and current expenses by budget line.
- Compliance with subaward terms and conditions, such as equipment or travel restrictions.
- Accuracy of the financial object code(s).
- Object code 6593 for the first $25,000 of the subaward (subject to F&A), or
- Object code 6594 for payments greater than $25,000, or for all payments on subawards which have no F&A calculated.
- Supporting documentation for high risk subrecipients on cost reimbursable subawards.
- Current risk assessment and debarment check.
- If a subrecipient’s risk level assessment is outdated, CGA may conduct an interim risk assessment or require additional information prior to authorizing payment.
CGA will enter payment details, advance reconciliation, and/or cost share information into Account Explorer, add a note to the DV that the contract is on file in CGA, and if appropriate, electronically approve the payment.
Subrecipient Government Owned Property
MSU subrecipients with government owned equipment funded by the subaward are subject to additional responsibilities and reporting requirements, which will be noted in the subaward. When applicable, CGA will note that the subaward includes government owned property in the Account Explorer system.
