Let’s start with a few key definitions:
In order to determine if subrecipient monitoring is necessary, the PTE must determine if the agreement it makes for the disbursement of federal program funds put the party receiving the funds in the role of a subrecipient or a contactor. The rules for this determination basically remained unchanged by Uniformed Guidance and can be found in section 200.331. Once the PTE has made the determination that the disbursements of the funds will be made as a subrecipient, the following requirements would apply:
The Pass-through Entity must:
1) Ensure that every subaward is clearly identified to the subrecipient as a subaward
2) Provide a subaward agreement with all pertinent information and requirements, at the time the subaward is granted, such as:
3) Perform a risk assessment – evaluate each subrecipient’s risk of noncompliance with federal status, regulations and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring. Best practice would be to have this done annually and would include the consideration of items such as the subrecipient’s prior experience with the subaward; results of prior audits; and new personnel at the subrecipient.
4) Verify the subrecipient is audited as required by subpart F of Uniform Guidance.
5) Monitor the activities of the subrecipient based upon risk assessment:
Required subrecipient monitoring activities:
Other potential monitoring tools:
The PTE should develop monitoring best practice which should be tailored for each subaward based on their risk assessment of the subrecipient. Monitoring procedures should be documented in writing. A best practice would be to evaluate annually when the risk assessment is updated.
6) Consider whether the results of subrecipient audits, on site reviews or other monitoring activities indicate conditions that require adjustments to the PTE’s own records.
7) Consider taking enforcement action for noncompliance by subrecipient.
8) Finally, the PTE should complete all closeout actions for federal awards no later than one year after receipt and acceptance of all required final reports.