1. Sub-recipient Monitoring and Contractor Determination

2. Sub-recipient or Contractor?
A non-federal entity may concurrently receive Federal funds as a recipient, sub-recipient, and a contractor.
Therefore, the pass-through entity must determine whether each agreement cast the party receiving the funds in the role of sub-recipient or a contractor.
The Federal awarding agency may supply and require recipients to comply with additional guidance to support determination.

3. Sub-recipient or Contractor?
Definitions:
Sub-recipient – 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.
Contractor – means a dealer, distributor, merchant, or other seller providing goods or services that are required for the conduct of a Federal program. These goods or services may be for an organization’s own use or for the beneficiaries of the Federal program, but creates a procurement relationship with the contractor.

4. Sub-recipient or Contractor?
Characteristics:
Sub-recipient
Determines who is eligible to receive Federal assistance;
Has its performance measured as to whether program objectives were met;
Has responsibility for programmatic decision making;
Responsible for following program requirements specified in the award; and
Uses the funds to carry out a program for a public purpose specified in the authorizing statue.

5. Sub-recipient or Contractor?
Characteristics:
Contractor
Provides the goods and services within normal business operations;
Provides similar goods and services to many different purchasers;
Normally operates in a competitive environment;
Provides goods and services that are ancillary to the operation of the Federal program; and
Is not subject to compliance requirements of the Federal program.

6. Monitoring Responsibilities
Pass-through entity:
Must provide reasonable assurance that sub-recipients are incompliance with Federal program guidelines and requirements.
Inform each sub-recipient of CFDA title and number, award name and number, and award year.
Advise sub-recipient of requirements imposed on them by Federal laws, regulations, and provisions of contracts or grant agreement.
Advise of any supplemental requirements imposed by the pass-through entity.

7. Monitoring Responsibilities
Pass-through entity: (cont’)
Monitor the activities of sub-recipients to ensure funds are used for authorized purposes and performance goals are achieved.
Ensure that sub-recipients that expend $750,000 or more in their fiscal year follow the audit requirements in OMB Uniform Requirements (2 CFR Part ).
Issue a management decision on audit findings within 6 months after receipt of the sub-recipient’s audit report.
Ensure that the sub-recipient takes appropriate and timely corrective action.

8. Monitoring Responsibilities
Pass-through entity: (cont’)
Require each sub-recipient to permit the pass-through entity and auditors to have access to the records and financial statements as necessary.

9. What Your Sub-recipient Should Know
Seek prior approval for certain costs and extensions to grant closing date.
Method in which they will be paid and any documentation that should accompany the claim.
Documenting the allowable sources of matching funds.
Prohibition of using the federal award to supplant existing resources.
Maintain property records for equipment and perform physical inventory of equipment.
Accounting for and using program income.

10. Factors to Consider When Monitoring Sub-recipients
Dollar amount of awards provided to sub-recipients.
Number of sub-recipient can effect how often you monitor them.
Complexity of program requirements.
Sub-recipient’s control environment (i.e., staffing levels, computer system, etc.).
Results of prior audits.
Sub-recipient with frequent requests for budget modifications, extensions, or exceptions to the rules.

11. When Monitoring Your Sub-recipients
Perform an on-site visit to review financial and programmatic records and observe operations.
Reconcile the sub-recipient’s budgeted expenditures to actual.
Offer sub-recipients technical assistance where needed.
Perform desk reviews to ensure allowable use of grant funds.
Have a second party within your organization periodically review the sub-recipient monitoring plan and reports.

12. Document Your Efforts
Maintain a file or record of the desk reviews that you perform and the results.
Develop a schedule of dates to perform on-site visits.
Document the work performed and the results of on-site visits.
Document corrective action taken by sub-recipient and follow-up work performed by you.
Retain a copy of the management decisions you issued in response to sub-recipient audit findings.

13. System for Award Management (SAM)
The first-tier sub-recipient are required to register in the System for Award Management (SAM) registration, including obtaining a Dun and Bradstreet Data Universal Numbering System (DUNS) number.

14. Penalties & Sanctions Withholding of disbursements or future awards;
Disallowance of cost;
Suspension/Termination of award;
Suspension/Debarment of Association;
Civil lawsuit; or
Criminal prosecution.

15. Questions & Answers (Q&A)