Subrecipient Monitoring and Common Findings By USDE Kristen Tosh Cowan, EsquireTiffany R. Winters, Esquire Brustein & Manasevit, PLLC Spring Forum 2011

Checklist of Grantee Responsibilities Identify and provide information about federal awards Inform subrecipients about compliance requirements Monitor subrecipient activities Ensure subrecipients have single audits, if required Provide technical advice and training Issue management decisions within six months on subrecipient single audit findings and ensure corrective action occurs Consider whether pass-through entity records must be adjusted as a result of subrecipient audits Require subrecipients to permit its auditors access to their records for monitoring and audit purposes 2

Checklist of Subrecipient Responsibilities Administer the grant from award to closeout Develop internal policies and system to ensure effective management of federal funds and compliance Ensure organization has compliant grants management systems Establish a budget of costs required to perform the program and method for monitoring budget against actual expenditures Keep updated on policy/legal changes Request prior approvals when necessary Prepare all required reports in a timely manner 3

Model System: AGA Partnership for Intergovernmental Management and Accountability Financial and Administrative Monitoring Tool Risk Assessment Monitoring Tool resources.aspx 4

WHO and HOW OFTEN to monitor? Do Risk Assessment – Where is state’s greatest risk of noncompliance? AGA “Risk Assessment Monitoring Tool” 5

Methods for Monitoring Review (NOT Solely Rely) Single Audits Arrange for Limited Scope Audits Schedule Site Visits Review Subrecipient Reports Require Prior Approval for Certain Activities Require 3 rd Party Evaluators Follow Subrecipient Coverage in the News 6

When are On-site Visits Appropriate?  Programs with complex compliance requirements  High dollar programs  New programs  Prior monitoring or audit findings  High profile programs  Inexperienced subrecipients/staff  Request onsite visit  Sites not visited recently  Risk Factors 7

Risk Factors: General Entity new to operating federal funds New program for entity High staff turnover or reorganization Experience of staff Untimely submission of applications, fiscal reporting, drawdowns, etc. Have other entities alerted SEA of potential risks? 8

Risk Factors Legal Any lawsuits Suspended or debarred Staff jailed, convictions, criminal investigations 9

Risk Factors Monitoring/Audits When was last on-site monitoring visit Any findings in prior visit More than one year since Single Audit Any special conditions put on awards 10

Risk Factors Fiscal Assessment Size of the grant Frequent untimely drawdowns Significant carryover Return of (lapsed) unspent funds Difficulty with matching/Maintenance of Effort (MOE) in past Cash flow problems Time and effort records for all employees paid with federal funds 11

WHAT to monitor? Program requirements – NOT ENOUGH Single Audits – NOT ENOUGH AGA “Financial and Administrative Monitoring Tool” 12

AGA Tool Administration Internal controls Accounting Cash management Audit resolution Record Retention and Access 13

AGA Tool Program (specific to program) Eligible beneficiaries Adequate plans Allowable costs Program Fiscal (specific to program) Budget Formation and Administration Matching/supplanting/MOE Comparability Set asides 14

AGA Tool Cross-Cutting/Fiscal Payroll/Time Distribution Procurement Indirect Costs Property Management 15

Document! Have written procedures explaining monitoring process and substance 16

Monitoring Follow-Up Grantees should use monitoring results to identify: Recurring problems unique to one program Opportunities to better monitor funds Recurring problems with individual subrecipients 17

Monitoring Follow-Up Subrecipients should use monitoring results to identify: Recurring problems that affect several programs that need to be corrected Effective methods to administer subawards and comply with program requirements that can be applied to other subawards Program-specific problems that may require a change 18

Office of Inspector General FY 2011 Work Plan Management Challenge: Implementation of New Programs/Statutory Changes Recipient and Subrecipient Use of Recovery Act Funds to Meet Program Objectives Race To The Top Grant Monitoring Process Discretionary Grant Monitoring Process for i3 Funds Oversight of SFSF Centers for Independent Living Controls over Recovery Act Funds* Guaranty Agency Health Job Retention at Loan Servicers 19

Office of Inspector General FY2011 Work Plan Management Challenge: Oversight and Monitoring FSA Oversight of Schools Participating in Direct Loan Program Proprietary Schools’ Participation in SFA Programs Approval of Proprietary School Change of Ownership TEACH Grants Program ECASLA Servicer Compliance* ECASLA Custodian Billings and Financial Transactions* Distance Education Programs Requirements and Monitoring State Award and Monitoring of SIG State Monitoring of IDEA, Part B MOE Effectiveness of the Competitive Award Process for ESEA Programs Potentially Overlapping High School Programs Discretionary Grant Results Oversight of Charter Schools 20

Office of Inspector General FY2011 Work Plan Management Challenge: Oversight and Monitoring, cont. 21 st Century CLC Process to Identify and Monitor High Risk/At Risk Grantees* Suspension and Debarment Functions for Grantees Federal Real Property Assistance Program Title IV Additional Servicers Contracts Management of the EDUCATE Contract Audit Resolution Process* 21

Office of Inspector General FY2011 Work Plan Management Challenge: Data Quality and Reporting Use and Accuracy of Performance Data Collected and Reported in EDFacts Department Performance and Accountability Planning and Reporting Process Department Data Quality Processes for Recovery Act Recipient Reporting 22

Office of Inspector General FY2011 Work Plan Management Challenge: Information Technology Security System Security Controls over Education Department Centralized Automated Processing System System Security Controls Over EDUCATE Security Controls Over External FSA Data Centers 23

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