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A-133 and Sub-Recipient Monitoring Steve Birkhofer.

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Presentation on theme: "A-133 and Sub-Recipient Monitoring Steve Birkhofer."— Presentation transcript:

1 A-133 and Sub-Recipient Monitoring Steve Birkhofer

2 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 A 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.

3 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.

4 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.

5 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 –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 for NC related agencies). Review Suspension of Funding List (SOFL) maintained by NC OSBM for non-compliance (www.NCGrants.gov)www.NCGrants.gov Broader compliance violations may be found at Dept of Homeland Security site

6 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 Cost- Reimbursement, prime awardee assumes greater risk in restricting reimbursements to defined delivery plan.

7 Copyright © 2008 NCURA A-133 and Sub-Recipient Monitoring LowMediumHigh 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 AwardStandard AwardLarge Award Long History with SubrecipientSome History with SubrecipientNo History with Subrecipient No Compliance ProblemsResponsive to Minor Compliance Issues Known History of Compliance Problems Understanding Risk:

8 Copyright © 2008 NCURA 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? A-133 and Sub-Recipient Monitoring

9 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.

10 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.

11 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 necessary) – 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

12 Copyright © 2008 NCURA A-133 and Sub-Recipient Monitoring Recent Settlements pursued by the Office of Inspector General (OIG): 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 $193,779. Yale currently under federal investigation George Washington University Payments made to fake subcontractors GWU agreed to $1.8 million settlement with DOJ Former PI stole nearly $1 million was sentenced to prison

13 Copyright © 2008 NCURA 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 risk- based system for monitoring and reporting subaward costs. UPR agreed with the findings and is launching a new subrecipient monitoring system.

14 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 awards. –Note: other major program deficiencies at UF have been reported.


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