1. The Importance of Subrecipient Monitoring
Steven Spillan, Esq.

2. Key Definitions in 2 CFR Part 200
Pass-through entity (200.74) - non-federal entity that provides a subaward to a subrecipient to carry out part of a Federal program.
Subrecipient (200.93) - a non-federal entity that receives a subaward from a pass-through entity to carry out part of a federal program.
Contractor (200.23) – means an entity that receives a contract.

3. Subaward vs. Contract (200.330)
It does not matter what the agreement is called…it matters what it DOES
Subaward
Contract
Allowable activities based on applicable statute, local plan, State rules
Management Rules:
Applicable federal rules (Part 200, Program rules)
State law/policies & procedures
Allowable activities based on terms & conditions of the contract
Terms of the contract
State/local contract law

4. Subrecipients ( (a))
Determines who is eligible to participate in a federal program
Has its performance measured against whether the objectives of the federal program are met
Is responsible for programmatic decision-making & complying with federal program requirements
Uses the federal funds to carry out a program as compared to providing goods or services for a program

5. Contractors ( (b))
Provides the goods and services within normal business operations
Provides similar goods or services to many different purchasers
Operates in a competitive environment
Provides goods or services that are ancillary to the operation of the federal program
Is not subject to compliance requirements of the federal program

6. Why Worry About Subrecipient Monitoring?
2 CFR § & 34 CFR §
Both rules make one thing perfectly clear:
The Pass-Through is responsible for ensuring grant funds are spent according to applicable laws & regulations

7. What are the minimum requirements?
34 CFR § State shall have procedures for:
Reviewing and approving applications for subgrants and amendments to those applications;
Providing technical assistance;
Evaluating projects; and
Performing other administrative responsibilities necessary to ensure compliance with applicable statutes and regulations

8. 2 CFR § 200.331 Five areas of concern: Subaward requirements
Risk assessment
Specific Conditions
Monitoring
Enforcement

9. Subaward – Required Info
Subrecipient name (must match name associated with unique entity identifier)
Subrecipient unique entity identifier
Federal Award Identification Number (FAIN)
Federal Award Date
Period of performance state and end date

10. Required Info (cont.)
Amount of federal funds ‘obligated by this action’
By this specific subaward agreement
Total amount of federal funds ‘obligated to the subrecipient’
Amount listed above + previous amounts under same award
Total amount of the federal award
Both amounts listed above + amount yet to be awarded

11. Required Info (cont.) Project description for FFATA purposes
Name of federal awarding agency, pass-through entity, and contact official
CFDA Number and Name
must identify the dollar amount made available under each federal award and the CFDA number at time of disbursement
Is the award for “R&D”
The indirect cost rate for the award

12. Required Info (cont.)
All requirements imposed by the pass-through ensuring award is used in accordance with all applicable requirements
Any additional requirements that the pass-through entity imposes in order to meet its own responsibility to feds

13. Required info (cont.) Negotiated indirect cost rate
Noting that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient's records and financial statements
Appropriate terms & conditions concerning closeout of the subaward

14. Risk Assessment
The Pass-through must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward

15. Risk Factors Subrecipient’s prior experience with the grant program
Results of previous audits
New personnel or substantially changed systems
Results of federal monitoring

16. Specific Conditions
If necessary (based on risk), conditions include ( ):
Require reimbursement
Withhold funds
More detailed reporting
Additional monitoring
Technical or management assistance
Prior approvals

17. Monitoring
Pass-through MUST monitor its subrecipients to assure compliance and performance:
Review financial and programmatic reports
Ensure corrective action
Issue a “management decision” on audit findings (six month deadline under § )

18. Monitoring Tools
Providing subrecipients with training and technical assistance on program-related matters
Performing on-site reviews of the subrecipient's program operations

19. Monitoring Schedule? Federal rules say nothing of timing
Many states employ “risk matrix” to determine monitoring schedule
Look at various risk factors, including when the last monitoring visit took place
Schedule accordingly

20. Monitoring (Single Audits)
Verify that every subrecipient is audited as required by Subpart F of Part 200
If a subrecipient does not meet the audit threshold, arrange for “agreed-upon procedures” on specific areas:
activities allowed or unallowed
allowable costs/cost principles
eligibility
reporting

21. Additional Monitoring Concerns
Mandatory Written Policies/Procedures
Cash Management ( (b)(6))
Allowability ( (b)(7))
Inventory Management ( (d))
Procurement ( (a))
Conflict of Interest/Gratuities ( (c)(1))
Travel ( (a))
Mandatory Disclosures
Conflicts of Interest ( )
Fraud ( )
Procurement and Equipment Thresholds
Methods of Procurement ( )
Equipment definition and Disposition (

22. Additional Monitoring Concerns (cont.)
Time Distribution Records ( )
Standards for Documentation ( (i)): Records must accurately reflect the work performed
Prior Approvals ( )
Use of grant agreements;
Cost sharing or matching;
Program income;
Budget and plan revisions;
Real property, Equipment, and Other Capital Expenditures;
Fringe benefits;
Pre-award costs;
Travel costs.

23. Enforcement ( )
Temporarily withhold cash payments pending correction
Disallow all or part of the cost
Wholly or partly suspend the award
Recommend suspension/debarment
Withhold further federal awards
“Other remedies that may be legally available”

24. Termination ( and )
The pass-through may terminate the award “for cause,” notice and opportunity for hearing

25. Need More Assistance? You know who to call…

26. Legal Disclaimer
This presentation is intended solely to provide general information and does not constitute legal advice or a legal service.  This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct.  Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein & Manasevit, PLLC.  You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.