Sub-Recipient Monitoring

If you receive federal awards and pass some portion to other organizations, the first thing you should do is verify whether an organization is really a sub-recipient or is a contractor.

A sub-recipient

determines eligibility to participate in a federal program
makes decisions about the program
is responsible for complying with federal program requirements
carries out the program

A contractor

provides goods or services as part of their regular business operations, which are similar to goods or services they provide to different purchasers,
operates in a competitive environment,
their goods or services are ancillary to the operation of the federal program.
If you pass money through to a sub-recipient, you must provide them with:

the federal award, name, and CFDA number,
the federal awarding agency,
the current federal award amount being passed through,
the cumulative federal award amounts being passed through,
the date of the award,
the timeframe for performing services,
the contact person with your agency,
the pass-through entity’s name and ID number, and
the indirect cost rate (their rate if they have an approved indirect cost rate or have agreed to use the de minimis 10% rate).

Under Uniform Guidance, now you must also:

assess the risk of the sub-recipient not complying with all requirements (based on your prior experience with the sub-recipient, or on the results of previous audits, or the results of federal monitoring that you are aware of),
monitor sub-recipients for performance and compliance (review reports of services they have provided, review audit reports, compare actual accomplishment to objectives,
where appropriate. Calculate whether per unit costs are as expected, and obtain information about cost overruns, failure to meet goals, delays and the like),
consider withholding funds if there are issues, until evidence of acceptable performance is received,
consider additional monitoring and more detailed reporting, and
If issues are identified consider training, consider on-site reviews or agreed-upon procedures audits of aspects of their program.

The sub recipient entity must provide:

confirmation of their indirect cost rate if they have one , and
access to records and financial statements.
Heveron and Company may be able to help with this process. We can provide sub recipient monitoring services or provide agreed-upon procedures examinations to help assure sub-recipient compliance. In either case you would have a report to document compliance with your responsibilities. Call us if we could help or if you have questions.

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