Sharing your federal money with other agencies? Learn what you can do today

Nov 28, 2023

In 2021, many local governments shared federal funds with others by granting subawards, but did not adequately monitor them. We noticed an uptick in audit issues, so we published two articles (July 2021 and November 2021). We expect local governments will continue to give out subawards, so we are republishing this content in one consolidated article to remind you of these requirements.

Passing along federal money to others doesn't relieve you of grant compliance requirements – it actually adds to your responsibilities because you must perform what's called “subrecipient monitoring.” When you pass-through federal money in the form of subawards – a grant award to other agencies to help carry out a portion of a grant program – consider asking these four questions:

Is it a subrecipient or a contractor?

Before you enter into any agreement with another organization or disburse funds to it, determine whether it qualifies as a contractor or a subrecipient. You need to know, as it affects the actions you will take. For example, if you contract for the purchase of goods or services, then federal procurement standards may apply. Alternatively, you may need to comply with subrecipient monitoring requirements.

To help you determine this, you could use this subrecipient vs. contractor checklist from the Association of Government Accountants (AGA). You can also learn more by reading the Uniform Guidance, 2 CFR §200.1 and 200.331. Just remember to document your analysis and conclusions.

Do your subaward contracts include the required federal language?

Your contract with the subrecipient must include detailed information about the federal award, the assistance listing number (ALN) for the program, grant requirements, a provision for the subrecipient to provide access to financial records, and more. You can read the full listing of requirements in the Uniform Guidance, 2 CFR §200.332(a).

Did you perform a risk assessment for every subaward?

You must conduct a risk assessment for each subrecipient and subaward, ideally before awarding the funds. This assessment helps you determine the subrecipient’s risk of noncompliance with program requirements, as well as its risk of using federal funds for unallowable purposes. Check with your grantor to see if it has a risk assessment tool or questionnaire available, or use one that’s available online (consider the AGA Risk Assessment Tool or Government Finance Officers Association’s members-only tool). The results of your risk assessment will guide the degree of monitoring you perform for each subrecipient. Be sure to document your risk assessments. You can learn more by reading the Uniform Guidance, 2 CFR §200.332(b).

Are you actively monitoring each subrecipient?

Your monitoring activities should extend beyond merely keeping a list of subawards or invoice copies to support reimbursement requests. For example, you could review timesheets or procurement transaction details to evaluate reimbursable costs. If the subrecipient provided goods or services to an eligible population, then you should verify the subrecipient only served those who met the eligibility criteria. You may also need to act proactively and provide training or technical assistance to subrecipients before they incur costs. For example, you may need to participate in the subrecipient’s meetings to ensure it handles procurement actions appropriately.

You should align the amount and type of monitoring with the degree of risk associated with the subrecipient. As risk increases, so should your monitoring efforts. For example, you might perform an on-site, in-depth review instead of a desk review for higher-risk subrecipients.

For all subrecipients, regardless of risk, there are certain minimum activities you must perform, including reviewing financial and performance reports. You can learn more by reading the Uniform Guidance, 2 CFR §200.332(d). Remember, you must document your monitoring activities and the related results.

You may find the AGA Subrecipient Monitoring and Self-Assessment Guide helpful. It provides a framework for understanding where a subrecipient is at risk of noncompliance so that you can effectively focus your attention and help where it is needed most.

Would you like more help?

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 the Washington Finance Officers Association non-conference training schedule. Other organizations also offer training, such as Government Finance Officers Association, American Institute of Certified Public Accountants, and the National Grants Management Association.

If you have other questions, comments or suggestions, feel free to email us at