Turbulent Waters: Subrecipient Monitoring from Three Perspectives

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Turbulent Waters Subrecipient Monitoring from
Three Perspectives

• Juanita Syljuberget Auburn University
• Robert Roy Georgia Institute of Technology
• Julie Cole Duke University
• May 13, 2008

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Subrecipient Monitoring

• Perspectives from the Auditee
• Auburn University
• Perspectives from the Project Viewpoint
• Georgia Tech/Georgia Board of Regents
• Perspectives from the Policy/Process Development
  Viewpoint
• Duke University

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Basic Subrecipient Monitoring Concepts
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What is a Subaward?

• Subaward means an award of financial assistance
  in the form of money, or property in lieu of
  money, made under an award by a recipient to an
  eligible subrecipient or by a subrecipient to a
  lower tier subrecipient. The term includes
  financial assistance when provided by any legal
  agreement, even if the agreement is called a
  contract, but does not include procurement of
  goods and services. OMB Circular A-110, Subpart
  A, ___.2 Definitions, (ff)

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Per OMB A-133 Compliance Supplement (March 2007)

• A pass-through entity is responsible for
• Award Identification
• During-the-award Monitoring
• Reporting
• Site visits
• Regular contact
• Or other means to provide reasonable assurance
  that the subrecipient administers Federal awards
  in compliance with laws, regulations, and the
  provisions of contracts or grant agreements and
  that performance goals are achieved.

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Per OMB A-133 Compliance Supplement (March 2007)

• 3) Subrecipient Audits
• - Ensuring that subrecipients that expend
  500,000 or more have met the audit requirements
  of OMB A-133
• - Issuing a management decision on audit
  findings within 6 months after receipt of the
  sub-recipients audit report
• - Ensuring that the subrecipient takes timely
  and appropriate corrective action on all audit
  findings

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Per OMB A-133 Compliance Supplement (March 2007)

• 4) Pass-Through Entity Impact
• Evaluating the impact of subrecipient activities
  on the pass-through entitys ability to comply
  with applicable Federal regulations.

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During-the-Award Monitoring

• Examples of factors that may affect the nature,
  timing, and extent of monitoring
• - Program complexity
• - Percentage passed through
• - Amount of awards
• - Subrecipient risk

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Audit Procedures

• Gain an understanding of the pass-through
  entitys subrecipient procedures
• Test award document and agreements
• Review the documentation of during-the-award
  monitoring
• Review the follow-up procedures to ensure
  corrective action on deficiencies

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Audit Procedures

• Verify that in cases of continued inability or
  unwillingness to have required audits,
  appropriate action was taken using sanctions
• Verify that the effects of subrecipient
  noncompliance are properly reflected in the
  records

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Audit Procedures

• Verify that the pass-through entity monitored the
  activities of subrecipients not subject to OMB
  A-133, using techniques such as those discussed
  in Compliance Requirements

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AUs Procedures

• Search for subrecipient website to find contact
  information, IDC rate agreement, tax ID
  (currently 90 bookmarks to Universities OSP
  Offices)
• Search Xtender to see if current audit
  information is on file or to scan in new info
• Search the Federal Audit Clearinghouse
• Search the Excluded Parties List System (EPLS)

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Federal Audit Clearinghouse

• The Federal Audit Clearinghouse acts as an agent
  for OMB to (1) establish and maintain a
  government-wide database of single audit results
  and related Federal award information (2)
  serves as the Federal repository of single audit
  reports and (3) distribute single audit reports
  to Federal agencies.
• The Clearinghouse maintains a site on the
  Internet at http//harvester.census.gov/sac/

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Excluded Parties List System (EPLS)

• This is the website to check to see if the
  subrecipient is debarred or suspended.
• Must have their legal name and tax ID
• The web address http//www.epls.gov/

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AU Procedures

• Audit information is scanned into Xtender by tax
  ID , Fiscal year, subrecipient name and document
  type (began April 2007)
• IDC Rate Agreements
• Financial Statements
• Audit Reports
• Correspondence

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AU Procedures

• FDP-style subagreement template
• Notes our Sponsors name
• Notes the prime award number
• Notes the fundings CFDA
• Certification Letter (audit certification) is
  attachment of subagreement requested on an
  annual basis thereafter
• Subagreement Checklist completed for every action

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AU Procedures

• Subagreement information entered into database
• Tracks audit information
• Tracks invoices
• Tracks life of subagreement

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Auditors Review

• Expect a copy of IDC rate agreement on file even
  if IDC was not a part of budget
• Expect annual audit certifications on file
• Question non-A133 organizations audit responses
• Are now asking for our procedures on site visits

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Project Viewpoint

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Project Viewpoint

• Roles and Responsibilities
• PI has primary responsibility for monitoring
  subrecipients
• Compliancy with fed regulations
• Award terms and conditions
• Departmental administrators have responsibility
  for assisting the PI in carrying out their
  monitoring responsibilities
• Reviewing invoices, questioning expenditures,
  documenting monitoring efforts

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Project Viewpoint

• What is your purpose of sub-recipient monitoring?
• Compliance
• Need for technical assistance
• Follow-up
• What is the associated risk of noncompliance
• Experience of your sub-recipient

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Project Viewpoint

• Risk Factors
• Size of the sub-award (50,000 vs. 5,000,000)
• Percentage of pass-through
• Complexity of sub-award
• Sub-recipients experience
• Administering
• Deliverables
• Prior monitoring and audit results
• Single year vs. multiyear sub-award
• Type of entity
• OMB-A-133 or not
• Non-profit/Profit
• Domestic/Foreign

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Project Viewpoint

• Know your sub-awardee
• Sub-recipient monitoring begins at proposal
  development
• An understanding of the capabilities of your
  sub-awardee can, and should drive your budget
  development and monitoring plan
• Assess the awardee
• Assess the level of expertise (Institution/College
  /Department)
• Review what can be monitored
• Tailor the agreement

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Project Viewpoint

• Know your sub-awardee
• Review the latest A133 audit
• Assess the SOP for Documentation
• IRB (document IRB oversight and that it remains
  current )
• IACUC
• Effort reporting overload payments
• Committed Cost Share
• FA (not everyone uses MTDC)
• Assess your risk
• Set your expectations and reporting requirements
• Delineate your deliverables put them in the
  sub-award contract (request supporting
  documentation for each invoice)

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Project Viewpoint

• Recommend quarterly financial reports with
  business official signature
• Makes sure everybody is watching
• Triggers and focuses review in manageable bites
• Reconciles invoices / payments / receipt of
  payment (facilitates annual report)
• Include progress on cost share
• Remember to document a relationship between
  programmatic progress and financial expenditures

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Project Viewpoint

• Audits
• Single Audits (A-133 500K)
• Limited-Scope Audits
• Desk Audits
• Onsite Audits
• Third Party Evaluation
• Paid consultants (fiscal, property, procurement)
• Beneficiaries of the subs services
• Community organizations where sub provides its
  services
• Cost of limitedscope audits is allowable only
  if the sub has not had a single audit

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Project Viewpoint

• Desk audit (fiscal, property, procurement)
• Personnel detail
• Effort reports
• Travel
• Travel expense statements
• Receipts
• Abstracts
• Materials and Supplies
• Food
• Agenda including time frames
• Sign-in sheets
• Telecom
• Photocopy

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Project Viewpoint

• Desk audit continued
• Equipment (inventory and title)
• Participant support costs
• Do the costs meet the sponsors definition?
• Is the Sub accounting this expense without FA?
• FA
• Assure consistency, particularly with negotiated
  rates

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Project Viewpoint

• Desk Audit continued
• So what do you do when you discover everything is
  not what you want it to be?
• Hopefully you have found this early
• You have already established a cordial
  relationship
• Explain that you are concerned that they have a
  potential audit risk
• Ask for a more detailed explanation of the subs
  procedures and decision making and justifications
• Realize you are in this endeavor together and
  that this is the time to make this the best
  managed project by tightening up some of the
  policies and procedures
• Implement corrective action and follow-up

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Project Viewpoint

• Desk audit continued
• Official letter confirming the results
• Specific problems
• Type of corrective action required
• Whether a corrective action plan is necessary
• Time frame for corrective action
• Technical assistance that is available
• Any additional reports required
• Any additional monitoring to be performed to
  verify corrective action has taken place.

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Project Viewpoint

• Desk audit continued
• Follow-Up
• Failure to follow-up can have serious
  consequences
• If corrective action is not taken the problems
  could be compounded, leading to a more serious
  finding

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Project Viewpoint

• And finally
• Document!

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Project Viewpoint

• References
• Techniques for Monitoring Federal Sub-awards,
  2nd edition Thompson Publishing Group
• Georgia Tech - The Office of Sponsored Programs
• Sub-agreements http//www.osp.gatech.edu/subagree
  .shtml

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Perspectives from the Policy/Process Development
Viewpoint

• Duke University

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The Duke Research Management Structure

• Decentralized management that provides faculty
  flexibility and responsiveness
• Departments are primary managers of sponsored
  program activity
• Two pre-award office (Campus and School of
  Medicine) reporting to two separate Management
  Centers
• Office of Sponsored Programs serves as single
  post-award office
• Research Costing Compliance serves as the
  monitoring, financial research policy development
  and training unit for the entire university
• Institutional Ethics and Compliance and School of
  Medicine Compliance Office serve as complementary
  compliance oversight coordinators

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Dukes responsibility

• To monitor the institutional, programmatic, and
  financial status of its SRs on sponsored research
  awards
• How-?
• Collect data
• Conduct risk assessment
• Monitor throughout the project period
• Respond Remediate
• Lack of programmatic progress
• Problems with invoicing, charges
• Audit issues disclosed before, during, or at
  project end

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Subrecipient Monitoring Policy and Process
Development Enhancement

• Initial meetings in August, 2007
• Original goal Develop forms for enhanced
  assessment of SR risk
• Post-award review of A-133 audits and post-award
  performance of current SRs factored into
  discussion
• Forms revised, forms revised, forms revised

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Challenge

• Coordinate and consolidate sometimes unique
  requirements of two pre-award offices,
  post-award, compliance monitoring, and ..
• Faculty needs to conduct research with least
  possible added process, and..
• Senior leadership interest in ensuring compliance
  

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Development of the On-Line Registration Process
and SR Risk Assessment

• Process divided into segments
• SR Profile Provides web-based portal to enter
  common data annually
• Form One On-line SR registration bolted to SPS
  (internal routing and approval system) Printed
  and sent to SR for signature
• Form Two Pre-award risk assessment process with
  weighted review criteria and input from A-133
  audit review in Sponsored Programs
• Form Three Reassessment after each non-competing
  segment

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Business as usual - what is our current process?

• We obtain a signed face page or consortium
  agreement (standard forms) from SR
• We set up a subcontract (SC) that flows down
  terms conditions adequately
• OSP conducts an annual sweep to obtain A-133
  audit results from SRs
• OSP checks invoices for unallowables
• Upon receipt of final invoice, OSP asks PI for
  OK-to-pay

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Duke develops new process

• Form 1, 2 3, plus the Rate of Burn Letter and
  the new contract checklist implement the how
• Collect data
• Create SR profile
• Conduct risk assessment
• Communicate issues
• Respond and Remediate
• Roll-out in three phases, while SR database is
  being built

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SR Database

• Designed to capture institution specific
  information on all Dukes SRs.
• We are asking our SRs to assist by entering their
  information

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SR Profile

• Three streams of data
• SR logs in and enters their information in the
  institutional profile.
• An audit assessment is made and entered by OSP
• Data streams from SPS to populate Form 1
• Each of the three new forms will be populated
  automatically from the SR database.

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Communication Protocol

• Communication between Duke PI and PI at SR does
  not change

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Roles Responsibilities

• Refer to Duke University's GAP

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Overview of process
X Primary
X Response required if appropriate
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The SR Database
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Search for a SR
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Profile Page 1
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Profile Page 2
This SR is subject to A-133
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Profile Page 3
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Profile Page 4
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How to generate Form 1
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Enter Proposal
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Select the document to print
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Populated from Form One data Certain criteria
will halt process (for example debarred
institution) Some criteria may be delayed until
award (for example IRB approval) Risk level
assessed Low, Medium, High
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Menu of subcontracting elements
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Form Three
Assessment at renewal Features input from PI,
ORA/ORS, and OSP Allows for imposition/relaxation
of more strenuous oversight, limitations on
project, etc.
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DRAFT Communications Tool
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Monitoring and Sampling

• RCC will sample each quarter to determine
• Contract terms clearly reflect risk assessment
• SRs are meeting programmatic and financial
  benchmarks (based on PI input)
• OSP has issued appropriate and timely Rate of
  Burn letters
• Costs billed by SR are allowable
• Timeliness/Correct invoices
• A-133 or alternative audit review has been
  updated and completed
• Follow-up to SR audit findings has been completed
• Communication between pre- and post-award

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Additional Steps

• Standard follow-up letter to each subrecipient
  with flowdown terms, additional guidance to SRs
• Issued by OSP/Post-Award at time of contracting
• Rate of Burn update to all PIs
• Issued at budget period mid-point
• Advises PI to take action if
• Too little or too much expense
• Performance issues
• PI may elect to halt payment until questions are
  resolved

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Time-Line
Phase 2
Phase 1
Phase 3
March 14 08 to July 31 08
August 1 08 to December 31 08
January 1 09 -
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Roll-out
new process
Phase 2
Phase 1
Phase 3

• New Proposals
• Depts enter SR into SPS before routing to
  ORS/ORA
• Use standard forms
• If SR profile exists, ORS/ORA may ask Dept to
  use Form 1

• New Proposals
• Depts enter SR into SPS before routing to ORS/ORA
• If no SR profile, use standard forms
• If SR profile exists, Dept generates Form 1 to
  replace standard forms

• New Proposals
• Depts enter SR into SPS before routing to ORS/ORA
• Form 1 is compulsory
• If SR profile does not exist, new entry will be
  requested by Dept

• Awards
• If no Form 1, business as usual
• If Form 1 is signed, ORS/ORA will use Form 2 for
  risk assessment

• Awards
• If SR profile created before proposal, signed
  Form 1 required
• If SR profile created after proposal, Form 1 not
  necessary
• ORS/ORA will use Form 2 for risk assessment and
  issue subK and copy Dept with monitoring chlist

• Awards
• ORS/ORA will use Form 2 for risk assessment and
  issue subK and copy Dept with monitoring chlst

• Renewals
• ORS/ORA generates Form 3, for Dept to complete,
  sign return

• Renewals
• ORS/ORA generates Form 3, for Dept to complete,
  sign return

• Renewals
• ORS/ORA generates Form 3, for Dept to complete,
  sign return

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Questions?