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Subrecipient Monitoring Under 2 CFR 200
Kris Rhodes, MS
Director, Higher Education Practice
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• Headquartered in Northbrook, IL
• Satellite Offices in:
• Denver, CO, Lexington, KY, Columbus, OH, Phoenix, AZ,
Charlottesville, VA, McLean, VA, and Albany, NY
• Backed by a $1.4 billion multinational corporation
• Gives our practice unparalleled financial stability
and the resources to invest in developing expertise
in Federal regulations and guidance like 2 CFR
Part 200
MAXIMUS Higher Education Practice
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• Serves over 150 colleges, universities, and
university hospitals in 49 states plus
universities in Puerto Rico and the US Virgin
Islands
• 90 top 100 research institutions
• Less than $1M to $1B in research
MAXIMUS Higher Education Practice
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MAXIMUS Higher Education Practice
Services include:
• F&A Rate Development, Software, &
Negotiation (Long and Short Form)
• Space survey software
• Effort reporting software
• Pre and Post-award Operations Support
• Compliance and Training Solutions
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Subrecipient Monitoring and
Management:
2 CFR 200.330-200.332
200.330 Subrecipient and Contractor
Determinations
200.331 Requirements for Pass-Through
Entities
200.332 Fixed Amount Subawards
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Subrecipient and Contractor Determinations 200.330
• Pass-through entities (PTEs) must make a case-by-case determination of the role of subrecipient or contractor. The awarding agency may supply and require recipients to comply with additional guidance to support these determinations, provided such guidance does not conflict with this section.
• PTEs are expected to use judgment in making the determination, the substance of the relationship is more important than the form of the agreement.
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Subrecipients 200.330 (a)
• Subaward Definition: An award provided by a PTE to a subrecipient for
the purpose of carrying out a portion of a Federal award and creates a
Federal assistance relationship with the subrecipient. A subaward may be
provided through any form, including an agreement the PTE considers a
contract.
• Subaward Characteristics include:
Determination by the PTE who is eligible to receive assistance;
Performance is measured in relation to whether objective of a program
are met;
Responsible for adherence to applicable Federal program requirements
stated in the Federal award;
Responsibility for programmatic decision making; and
Use of funds to carry out a program for a public purpose, as opposed to
providing goods or services
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Contractors 200.330 (b)
• Contract Definition: Contracts are a legal instrument for purchase of property, goods or services to carry out a project; they create a procurement relationship with the contractor.
• Contractor Characteristics include when the entity:
Provides goods and services within normal business operations;
Provides similar goods or services to many different purchasers;
Normally operates in a competitive environment;
Provides goods or services that are ancillary to the operation of the Federal program; and
Is not subject to compliance requirement of the Federal program as a result of the agreement.
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Before Subaward Issuance
1. Validate they are not an excluded party (2 CFR 200.205,
sam.gov);
2. Review their Single Audit report at Federal Audit Clearinghouse (harvester.census.gov);
3. Conduct a risk assessment prior to subaward issuance; and
4. Review performance/compliance data which may be available institutionally.
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Requirements for Pass-Through Entities 200.331(a)
PTEs must:
• Ensure every subaward is clearly identified to the subrecipient as a subward at the time of issuance and includes the federally prescribed data elements from this section.
• Flow down the applicable terms and conditions of the prime award.
• Ensure additional requirements are imposed to enable the PTE to meets it own responsibility for reporting.
• Use the subrecipients approved indirect cost rate, if no rate exists then work to negotiate a rate or apply the de minimis indirect cost rate of 10%.
• Ensure access to the subrecipient’s records and financial statements.
• Ensure the subaward includes terms and conditions concerning the closeout of the subaward.
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PTE Risk Evaluation 200.331(b)
• PTEs’ must evaluate each subrecipient’s
risk of noncompliance. Factors for
consideration include:
Prior experience with same or similar awards;
Results of previous audits, including whether
the entity receives a Single Audit;
Whether the organization has new personnel
or new or substantially changed systems; and
The extend and results of Federal awarding
agency monitoring
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Risk Assessment 2 CFR 200.205
In evaluating risks posed by applicants, the Federal awarding agency may use a risk-based approach and may consider any items such as the following:
(1) Financial stability;
(2) Quality of management systems and ability to meet the management standards;
(3) History of performance. The applicant's record in managing Federal awards, if it is a prior recipient of Federal awards, including timeliness of compliance with applicable reporting requirements, conformance to the terms and conditions of previous Federal awards, and if applicable, the extent to which any previously awarded amounts will be expended prior to future awards;
(4) Reports and findings from audits performed under Subpart F—Audit Requirements of this part or the reports and findings of any other available audits; and
(5) The applicant's ability to effectively implement statutory, regulatory, or other requirements imposed on non-Federal entities.
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Risk Assessment
Have an assessment tool and database
Self assessment tool
• Including certification that the information provided is accurate and
an acknowledgement they are aware that remedies for
noncompliance and corrective action can be pursued if the
information is found to have been falsified.
PTE assessment tool (your assessment of the risk)
Database so you can avoid requesting self-assessment tools
multiple times from the same organization.
Update database with issues that may arise with the
organization’s subawards
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Risk Assessment 2 CFR 200.205
Guidance for the Feds: Prior to making a Federal
award, the Federal awarding agency is required by 31
U.S.C. 3321 and 41 U.S.C. 2313 note to review
information available through any OMB-designated
repositories of governmentwide eligibility qualification
or financial integrity information, such as Federal
Awardee Performance and Integrity Information System
(FAPIIS), Dun and Bradstreet, and “Do Not Pay”. See
also suspension and debarment requirements at 2 CFR
part 180 as well as individual Federal agency
suspension and debarment regulations in title 2 of the
Code of Federal Regulations.
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Subaward Terms for Risk Mitigation 200.331 (c)
PTEs are authorized to impose the following terms
(200.206) requirements:
Payments as reimbursement rather than advance payment
Withhold authority to proceed to the next phase until receipt of
evidence of acceptable performance within the performance
period
Additional, more detailed financial reports
Additional project monitoring
Attendance at technical or management assistance training
Additional prior approvals and notifications
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Special Condition Obligations 200.331 (c)
PTEs must notify the subrecipient as to the:
Additional requirements, why they are being imposed
Actions needed to remove the additional requirements, if applicable
Methods for requesting reconsideration of the requirements
Any special conditions must be promptly removed once they have been addressed or corrected.
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PTEs and Monitoring 200.331 (d-f)
Monitoring must include:
Reviewing programmatic reports
Ensuring subrecipients take timely
and appropriate action on all
deficiencies
Issuance of a management decision
for audit findings pertaining to the
award
Verification every subrecipient is
audited, if required by 2 CFR
200.501
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PTEs and Monitoring 200.331 (d-f)
Depending on the risk assessment,
monitoring may include:
Providing of training and technical assistance
Performing on-site reviews of program
operations
Arranging for agreed-upon-procedures audit
engagements
If monitoring or auditing indicates corrections
must be made, the PTE must ensure their
records are also corrected.
If enforcement actions are required, they are
taken in accordance with §200.338,
Remedies for Non-compliance.
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Risk Determination
Based on risk determination:
Incorporate special consideration terms and conditions to mitigate risk
• Mandatory training
• Require receipts, effort documentation, monthly reporting (financial/technical), prior approvals, etc.
• Define the time requirement for the special conditions and how reconsideration of the conditions can be pursued and how the actions required to have the conditions removed
After award
• Conduct desk reviews
• Conduct site visits
• Review timeliness of reporting
Issues
• Take action
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Remedies for Noncompliance 2 CFR 200.338
If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances:
(a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity.
(b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance.
(c) Wholly or partly suspend or terminate the Federal award.
(d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency).
(e) Withhold further Federal awards for the project or program.
(f) Take other remedies that may be legally available.
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Policies, Procedures, and Monitoring
Policies and procedures should:
Clarify monitoring responsibilities for the:
• PI/PD – What the PI’s signature means when an invoice is approved for payment
• Units responsible for subrecipient monitoring tasks – Federal Audit Clearinghouse verification
– Sam.gov verification
– Agreement term determinations
– Desk audit responsibilities
Provide institution-wide standardized monitoring tools:
• Subawardee self assessment
• PTE assessment
• Special condition inclusion terms for agreements
• Checklists for validation of subawardee compliance with terms
• Desk audit toolkits and expectations
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Monitoring and Education
Faculty and Department Administrator Training
Importance of ensuring the invoice requests appear consistent
with the work performed;
Late or slow invoicing;
Scientific disagreements and work; and
Performance disagreements.
Subrecipient Training
Webinars on costing basics, compliance requirements,
procurement and competition, record retention, etc.
Project kickoff meetings with training
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Monitoring and Desk Audit Considerations
1. Is the spending proportional?
If not, does the PI know why?
2. Expenditure review? Allowable, allocable, reasonable
3. Financial and technical reports
submitted timely?
4. Cost share?
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Monitoring and Single Audit Reports
Expectation that we:
Determine whether subrecipients had an unqualified audit or
not.
If not, did the issues identified have potential to have
implications for our subawards?
If so, do we need to conduct a more thorough review of the
subawardees records?
Do need to arrange for an agreed upon procedures audit for
the award(s).
Secure the subrecipients corrective action management plan.
Follow up to ensure corrective action has been taken.
Correct any records that may need to be adjusted.
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Recap: Subrecipient Monitoring is Not New
• What’s new is the risk assessment
and clarification on the use special
condition provisions in subawards.
• Expectation to remove special
condition provisions when
subrecipient demonstrate
practices the reduce the risk level
or take corrective action are also
new.
