Subrecipient Monitoring Under 2 CFR 200 Kris Rhodes, MS Director, Higher Education Practice krisrhodes@maximus.com 1
MAXIMUS Higher Education Practice 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 2
MAXIMUS Higher Education Practice 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 3
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 4
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 5
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. 6
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 7
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. 8
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. 9
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. 10
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 11
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. 12
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 13
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. 14
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 15
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. 16
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 17
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. 18
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 19
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. 20
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 21
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 22
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? 23
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. 24
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. 25
Questions Kris Rhodes, MS Director, Higher Education Practice krisrhodes@maximus.com 26