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Colleges and universities that pass federal grant funds through to research partners are subject to increased scrutiny under the OMB’s Uniform Guidance.


How to Monitor Subrecipients of Higher Education Research Grants

  • 4/13/2016

If your college or university receives research grants from the federal government, and then parcels out some of those funds to other institutions to assist with your research projects, you can expect that activity to come under increased scrutiny in your next single audit or program review.

Until the Office of Management and Budget issued its Uniform Guidance (UG, formerly referred to as Omni Circular, Super Circular, and Uniform Grant Guidance) circular late in 2014, subrecipients of federal research grants were largely unmonitored. When you think about the effort your institution puts into claiming research grant money — extensive proposals, interviews, and reviews — it does seem odd that subrecipients of pass-through funds don’t have to undergo that same rigor to benefit from the award. It looks like the government took notice and added several new requirements in the UG.

So now your higher education institution has a few more rules to follow. Here’s what you need to do to monitor your subrecipients, be compliant, and withstand an audit or review.

Properly distinguish subrecipients from vendors

Subrecipients are different from vendors. If the research partner you are paying is carrying out programmatic duties, it’s very likely a subrecipient. Auditors and reviewers take the position that if you aren’t properly identifying subrecipients, then you aren’t properly monitoring them. Ambiguity in this area will motivate them to dig deeper.

It’s critical, then, that you distinguish subrecipients from vendors and record the difference. Institutions will often put language in the subaward stating that the arrangement is viewed as a vendor relationship, thinking this verbal maneuver can evade subrecipient monitoring protocols. But the government is wise to this tactic and won’t be satisfied with it.

You should have a process in place to effectively evaluate each relationship. This can be as simple as having designation built into your system that asks primary investigators whether or not a potential subrecipient is carrying out programmatic duties. Or you could incorporate the distinction into your standard subaward control sheet, which would flag the relationship as a potential subrecipient.

Perform a subrecipient risk assessment

Once your school has accurately labeled your subrecipients, the UG requires you to perform a risk assessment on each of them prior to passing on subawards. The UG doesn’t detail precisely how a risk assessment should be performed, but it does specify that it should be documented and consistently applied.

An effective, robust risk assessment should determine, at the very least, if a subrecipient has:

  • An effective control environment in place
  • No history of prior findings
  • The expertise to carry out the programmatic outcomes of the award

A thorough risk assessment may seem like an administrative nightmare, but some planning and regimentation (e.g., standard checklists) can ease the burden and facilitate consistent application. We have a standard checklist that can get you started in developing your own, based on your particular needs and requirements.

Develop a monitoring plan

The UG doesn’t specify precisely what your monitoring plan should look like, but it’s clear that it should fall in line with your subrecipient risk assessment. For instance, if you determine that a subrecipient is fairly risky but decide to pass funds to it anyway, you need to increase the scope of your monitoring. It isn’t specified, but it’s fair to say that a single audit report from a higher-risk subrecipient probably won’t satisfy monitoring requirements.

Monitoring a subrecipient can take various forms. The more effective programs we see in our practice involve on-site training of the subrecipient, quarterly visits to assess the programmatic results, and imposing agreed-upon procedures if it is not required to have a single audit.

Regardless of the extent of your monitoring, the UG expects your program to documented and followed. A standard checklist is a smart practice to help ensure that your school is in compliance.

Include required communication

The UG requires that you communicate the lengthy list of items outlined in CFR 200.331 (a) to every subrecipient at the beginning of the award process. We suggest you build those items into your standard award language to cover all your bases and relieve departmental program staff from the obligation.

Some items you must provide a subrecipient include:

  • Clear identification that this is, in fact, a subaward subject to the UG
  • Federal award identification
  • Federal award dates (when you received the award)
  • Subaward period of performance
  • Total federal funds being obligated by this award
  • Catalog of Federal Domestic Assistance (CFDA) number and name and whether or not the award is research and development

These steps all look simpler in print than in practice, but if you follow them in designing and carrying out your subrecipient monitoring program, you should be ready for your next single audit or program review.

How we can help

A strategy of preparation is your best approach to compliance. Our higher education industry professionals provide grant compliance services that help you navigate and manage the grant-making and management process while staying in line with regulations and review procedures.