Lack of subrecipient monitoring is leading to an increase in audit issues. Learn what you can do today
Nov 30, 2021
The influx of money from the Coronavirus Relief Fund (Assistance Listing 21.019) prompted many cities and counties to make more subawards than they have the past. Passing along federal money to others does not relieve governments of grant compliance requirements—in fact, it adds to them. The State Auditor's Office is seeing an increase in audit issues around subrecipient monitoring, primarily due to lack of awareness of the requirements.
Earlier this summer, SAO published an article on subrecipient monitoring with information on the various requirements. But as governments continue to make subawards using funds from the Coronavirus Relief Fund or the Coronavirus State and Local Fiscal Recovery Fund (Assistance Listing 21.027), we want to emphasize some important points your government should keep in mind so you can avoid audit issues in the future.
Your risk assessment should drive your plan for monitoring
A risk assessment is absolutely required for each subrecipient and for each subaward you give! It's a best practice to perform a risk assessment of a subrecipient before you award the funds. Most entities use a risk assessment tool (questionnaire) for this purpose. You can check with your grantor to see if one is available.
Otherwise, there are several examples that you can modify based on your needs and preferences. If you are a Government Finance Officers Association (GFOA) member, check here for a sample questionnaire and guidance about subrecipient monitoring. The AGA Risk Assessment Tool is another sample questionnaire. Both tools encourage the use of a risk scoring system to determine the extent of monitoring to perform.
The results of your risk assessment will guide the degree of monitoring you perform for each subrecipient. Be sure to document your risk assessments!
There can be more to monitoring a subrecipient than you might expect
Monitoring your subrecipients is not a passive activity. It's more than just keeping a list of subawards or files of invoice copies that tie to a reimbursement request. The purpose of the monitoring is to ensure subrecipients use subawards for authorized purposes, comply with federal requirements and the terms of the awards, and achieve their performance goals. This might require proactive actions on your part, such as providing training or technical assistance.
For example, you might have to participate in the subrecipient's meetings to ensure they are handling procurement appropriately. Additionally, if the subaward provides something like utility financial assistance to eligible people or small businesses, you should be monitoring to ensure that those who received payments met the eligibility criteria.
The higher the risk associated with any subrecipient, the more extensive the monitoring activities would be. For example, you might perform an on-site, in-depth review instead of a desk review. There are many different activities you could perform during an on-site review, but a few examples include pulling timesheets or procurement transaction details to further evaluate costs that your subrecipients charged to the grant.
For all subrecipients, regardless of risk, there are certain minimum activities you must ensure you perform, including reviewing financial and performance reports. You can read more about these in the Uniform Guidance §200.332 (d). One tool that might also help you is the AGA Subrecipient Monitoring and Self-Assessment Guide. Be sure to document the monitoring activities you do perform and the related results.
Start now, whatever your circumstance
If you are complying with the subrecipient monitoring requirements—great!
If you did not perform a risk assessment and/or monitor your subrecipients for 2020 or to date in 2021, start now! You will want to know you've met your responsibilities and verified that your subrecipients complied with the grant terms. We urge you to do what is required now rather than wait!
While your grantor is the best source for information about a federal program, you can also submit technical questions about federal awards to our HelpDesk in the client portal.
For training on grant compliance, see Washington Finance Officers Association non-conference training schedule.
If you have other questions, comments or suggestions, feel free to email us at Center@sao.wa.gov.