The Uniform Guidance Subrecipient Monitoring Training

The Uniform Guidance Subrecipient Monitoring Training
Presented to Faculty and Staff September 20, 2018 September 20, 2018

Agenda and Outcomes The Basic Idea Agenda Introductions
Background on the Uniform Guidance Subrecipient Monitoring Roles and Responsibilities Processes Practice Activities Key Takeaways Resources Outcome: After this training we expect that you should have an understanding of the Uniform Guidance and the changes to the regulations for subrecipient monitoring; you should know your responsibilities, and know where to find answers to any questions that may arise. The Basic Idea

1. Background on The Uniform Guidance

Uniform Guidance Training Series Day One, Part One
11/10/2014 Background on Uniform Guidance Overview of Changes The Uniform Guidance includes a combination of: Current Language from Existing Circulars Revised Language of Existing Circulars New Language The final guidance which went into effect December 26, superseded requirements from: OMB Circulars A-21, A-87, A-110, and A-122 (which have been placed in 2 C.F.R. Parts 220, 225, 215, and 230), Circulars A-89, A-102, and A-133 The guidance in Circular A-50 on Single Audit Act follow-up What Changed? Combined 8 Circulars into 1 Adjusted and revised the language and added new language Granted greater flexibility to the recipient Placed greater emphasis on institutional policies and internal controls What Remained the Same? In many respects the guidance remains unchanged However, just the change itself will result in increased scrutiny because of the renewed awareness and focus

Uniform Guidance Training Series Day One, Part One
11/10/2014 Overview of Uniform Guidance & Institutional Impact EFFECTIVE DATES – EXISTING AWARDS & GUIDANCE Existing Awards Once the Uniform Guidance goes into effect for non-Federal entities, it will apply to Federal awards or funding increments after that date. It will not retroactively change the terms and conditions. Entities will likely make changes to their own policies and procedures that will impact their existing/older awards. Non-Federal entities wishing to implement entity-wide system changes to comply with the Uniform Guidance after the effective date of December 26, 2014 will not be penalized for doing so. TCNJ has adopted policies and procedures that impact existing awards. Pre-Existing Guidance The terms and conditions for Federal awards (i.e. 2 CFR 220, 225, and 230) always govern. The Uniform Guidance is now in effect, Federal agencies need to ensure the continued availability of access to the terms and conditions of Federal awards made prior to the Uniform Guidance becoming effective.

Subrecipient Defined Subrecipient, aka: Outgoing Subawards Sub-outs
Subawardees Subcontracts a subrecipient relationship exists when funding from a pass-through entity is provided to perform a portion of the scope of work or objectives of the pass-through entity's award agreement with the…awarding agency.

Uniform Guidance Traing Series Day One, Part One
11/10/2014 Overview of Uniform Guidance & Institutional Impact POST-award requirements - subcontract monitoring The prime awardee sets requirements and leads subcontract monitoring. Final OMB Uniform Guidance Institutional Impact and Implications Subrecipient monitoring tools currently in the Compliance Supplement are integrated. Compliance Supplement, page 151. Pass-through entities must honor either a negotiated or minimum 10% of MTDC indirect cost rate for sub-recipients. Subrecipient monitoring via the review of performance and financial reports is limited to what the pass-through entity has deemed necessary to meet their own requirements under the Federal award. Only when findings pertain to Federal award funds provided to the subrecipient by the pass- through entity does the pass-through entity have to follow up, ensure corrective action, and issue management decisions on weaknesses. 10% MTDC minimum rate facilitates collaboration with subrecipients. Prime awardee institutions decide what is necessary for monitoring subrecipients, including the review of financial and programmatic reports, in order to meet their own obligations under Federal awards. Only when findings pertain to federal funds provided to sub-recipients, must the pass- through entity manage corrective actions.

Overview of Uniform Guidance & Institutional Impact 11/10/2014 Post-award requirements – subcontract / vendor clarification Provides clarification between subrecipient and vendors and assigns responsibility for determination to mitigate disagreements with sponsor classification. Final OMB Uniform Guidance Institutional Impact and Implications The agreement characteristics necessary to determine subrecipients vs. vendors on Federal awards are clarified. Responsibility for making this determination is assigned to the pass-through entity. Clarification should help mitigate agency retrospective disagreement of determination.

Uniform Guidance Training Series Day 2
11/11/2014 Overview of Uniform Guidance & Institutional Impact Subrecipient Monitoring – Uniform Guidance Impact In the Uniform Guidance, the Subrecipient Monitoring and Management section is applicable to all Federal Awards and provides additional specific guidance related to: Subrecipient and contractor determinations ( ) Requirements for pass-through entities to issue, monitor and manage subawards ( ) While the updated guidance allows for increased flexibility, it is important to note that there is also a greater emphasis on internal controls to ensure compliance

2. Subrecipient Monitoring

Subrecipient vs. Contractor
COFAR Subrecipient and contractor determinations Subrecipient Contractor Responsible for making (Federally-sponsored) programmatic decisions Provides goods/services strictly as outlined in a Procurement agreement No decision making impacting the Federally sponsored program Involvement – specifically from this entity or investigator - is critical to the success of the award Goods or services are ancillary to the operation of the Federal award Involvement is critical because of the uniqueness or specialized knowledge/skill/etc. of the entity/investigator Similar goods or services are provided to many different purchasers and normally in a competitive environment

Subrecipient vs. Contractor
COFAR Subrecipient and contractor determinations Subrecipient Contractor Uses the Federal funds to carry out a program for a public purpose (specified in authorizing statute) Provides goods and services in return for Federal funds for the benefit of the pass-through entity Even though goods/services are used in support of a Federally-sponsored project Performance measured on whether objectives of a Federal program were met Performance measured on pass-through entity satisfaction with goods/services Must adhere to applicable program requirements specified in the Federal award (e.g. A-133 audit if above threshold) Not subject to compliance requirements of the Federal program BUT similar requirements may apply for other reasons

11/11/2014 Administrative Requirements Subrecipient Monitoring The pass-through entity must evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring. Considerations for Subrecipient Monitoring ( (c)): Prior experience with the same or similar subawards Results of previous audits Whether new or substantially changed personnel or systems Extent and results of Federal awarding agency monitoring

11/11/2014 Administrative Requirements Subrecipient Monitoring Fixed amount subawards ( ) Permits a non-Federal entity to make subawards based on fixed amounts (in accordance with ) not exceeding the Simplified Acquisition Threshold (currently $150,000) The prior written approval of the Federal awarding agency is required Typically used to obtain specific deliverables from a subrecipient for a preset amount of funding when the following are clearly defined: Specific scope Adequate cost or pricing data is available to establish a fixed amount Accountability is based primarily on performance and results Cannot be used if cost sharing is required by the sponsor

11/11/2014 Administrative Requirements Subrecipient Monitoring Requirements for Subrecipient Monitoring ( (d)) Review reports required by the pass-through entity Follow-up to ensure subrecipient takes appropriate action on all deficiencies pertaining to the subaward from the pass-through entity identified through audits, on-site reviews, and other means Issue a management decision for audit findings pertaining to subawards made by the pass-through entity Monitoring Tools ( (e)) Providing subrecipient training and technical assistance Performing on-site reviews Arranging for agreed-upon-procedures engagements No listed tool is required nor is the list of tools all inclusive Determination on which tools is a matter of judgment for the pass-through entity based upon its assessment of risk

11/11/2014 Administrative Requirements Subrecipient Monitoring Invoice- THINGs to Consider IF THERE ARE ANY QUESTIONS ON THE INVOICES, DO NOT APPROVE UNTIL ALL ITEMS ARE APPROPRIATELY RESOLVED. Please contact OAGSR for any assistance. Is the subaward / subcontract fully executed? Is the subaward number reflected on the invoice? Were incurred costs allowable, allocable, and reasonable under the subaward / subcontract and the Uniform Guidance? Were incurred costs charged in accordance with any special agreement terms and conditions? Has the PI approved appropriateness of costs and confirmed that subrecipient is making adequate technical progress on project (or completed technical performance, if final invoice)? If this is a final invoice? If so, is the invoice marked “final”? If the subcontract included cost sharing requirements, does the invoice contain the required cost sharing information?

11/11/2014 Administrative Requirements Subrecipient Monitoring Invoice- THINGs to Consider (Continued) IF THERE ARE ANY QUESTIONS ON THE INVOICES, DO NOT APPROVE UNTIL ALL ITEMS ARE APPROPRIATELY RESOLVED. Please contact OAGSR office for any assistance. Does the total amount invoiced agree with the total of expenses listed by budget category? Is the F&A calculated correctly with the correct and agreed upon rate for the subrecipient? Were all the expenses incurred within the subcontract start and end dates? Are the expenses in agreement with the subcontract budget? Are the expenses allowable per the subcontract and the prime award? Are expenses on a cost reimbursable subcontract charged based on actual expenses or does it appear to be an allocation of the budget? Is it signed and does it contain this statement: "I certify that all expenditures reported (or payment requested) are for appropriate purposes and in accordance with the provisions of the application and award documents. Invoices must be reviewed and approved by the PI and processed by Accounts Payable for payment, which will be charged to the sponsored award.

11/11/2014 Administrative Requirements Subrecipient Monitoring The following monitoring methods must be utilized for all subawards: Reviewing financial and programmatic reports required by TCNJ in the subaward agreement; Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the award provided to the subrecipient by TCNJ detected through audits, on-site reviews, and other means; Issuing a management decision for audit findings pertaining to the award provided to the subrecipient by TCNJ. Subrecipient financial reports must: Include both current period and cumulative expenditures to budget Be reviewed and approved by the PI within thirty (30) days of receipt Have expenditures that are reasonable, necessary, consistent with the project budget, and otherwise in compliance with the allowable costs requirements The PI’s approval and submission of the check request for payment is certification that the review of expenditures has been performed and that the results were satisfactory. Copies of subrecipient reports should be submitted to the Office of the Treasurer

11/11/2014 Administrative Requirements Subrecipient Monitoring – Pass-through entities ( ) The Uniform Guidance specifically outlines the elements required to be included in any subaward agreement, which must be clearly identified as such by the pass-through entity. Additionally, the Uniform Guidance includes audit responsibilities that were in A-133. The pass-through entity must: Include specific information in the subaward agreement, including indirect cost rate Conduct a risk assessment to determine appropriate subrecipient monitoring AND must monitor subrecipients Consider if specific subaward conditions are needed Verify subrecipients have audits in accordance with Subpart F Make any necessary adjustment to the pass-through entity’s records based on reviews and audits of subrecipients Consider actions to address subrecipient noncompliance

3. Processes

Processes Subrecipient Monitoring The PI informs the OAGSR of the intention to utilize a subrecipient on a sponsored project. Must be identified per the proposal and all paperwork included, reviewed and agreed upon by OAGSR Example:

Substance of the Relationship Form of the Agreement
Processes Subrecipient Monitoring The OAGSR performs and documents the subrecipient versus contractor determination. Each agreement may have a varying set of criteria…. Consider the make-up of each one, but establish a consistent, organizational mindset in line with federal requirements. Substance of the Relationship Form of the Agreement

Processes Subrecipient Monitoring The OAGSR, in consultation with the PI, performs and documents the subrecipient risk assessment and determines whether the subaward should be issued, and whether any additional terms and conditions or monitoring methods are appropriate. The OAGSR drafts the subaward agreement using the standard template and ensures all required elements and specific terms and conditions are included. The subrecipient and OAGSR execute the subaward agreement.

Processes Subrecipient Monitoring The subrecipient performs work on the grant and submits financial and programmatic reports to the PI as required. The PI reviews and approves financial and programmatic reports and follows up on any issues. The PI submits financial reports/invoices to the Office of the Treasurer for payment once approved using the Check Request Form. The PI or Office of the Treasurer should request the subrecipient to provide clarification of invoiced charges that appear unusual, excessive, or otherwise questionable and retain documentation of the communications with the subrecipient, documents received, and resolution of the issue. The PI, OAGSR, or Office of the Treasurer perform other monitoring responsibilities as assigned. The PI, OAGSR, Office of the Treasurer or other responsible parties notify each other of any noncompliance identified. The subrecipient is notified in writing of the noncompliance, options and timeline for remediation, and potential sanctions. Follow up is performed and documented until the noncompliance is remediated.

Processes Subrecipient Monitoring On-site visits or audits of the subrecipient may be performed at the discretion of the PI, OAGSR, or Office of the Treasurer to evaluate compliance with the project’s scientific objectives, and the appropriateness of the subrecipient’s administrative systems, processes and charges.

4. Roles and Responsibilities
Please spend a couple minutes writing down the various people that have a role in this process and what you think their responsibilities are. We will come back as a group and discuss these together.

Roles and Responsibilities
Principal Investigator Is Responsible for: Including the subaward in the proposal and negotiating the scope and objectives of the subaward agreement with the subrecipient. Monitoring subrecipients’ progress through financial and progress reports and regular communication. Reviewing and approving subrecipient invoices, completing the Subrecipient Invoice Checklist, and attaching the completed Checklist to the check request for payment to the subrecipient. Ensuring compliance with Federal regulations and both prime and subrecipient award terms and conditions. Raising any questionable items from subrecipient monitoring to the Office of the Treasurer or OAGSR to determine appropriate action. Following up on deficiencies identified from subrecipient monitoring.

Project Administrative Support Staff are Responsible for: Assisting PIs in reviewing their monitoring responsibilities. Reviewing subrecipient invoices, and identifying and following up on questionable expenditures, if necessary. Maintaining documentation of monitoring efforts.

Department Chair/Deans are Responsible for: Notifying the PI and/or the OAGSR of any information, questions, or concerns regarding a proposed subrecipient. Office of Academic Grants and Sponsored Research (OAGSR) is Responsible for: Assisting PIs in informing the subrecipient of all applicable federal laws and regulations and all appropriate flow-down provisions from the prime award by drafting the subaward agreement. Conducting a risk assessment of proposed subrecipients prior to contracting (sub- awarding) to ensure their fitness (including, but not limited to, financial soundness). Ensuring completion of the Subrecipient Profile. Providing further training and guidance in interpreting regulations and subrecipient award terms and conditions.

Office of The Treasurer is Responsible for: Ensuring completion of the Subrecipient Questionnaire and Subrecipient Invoice Checklist. Performing post-award subrecipient monitoring, such as obtaining and reviewing subrecipient single audit reports in accordance with Subpart F—Audit Requirements, reviewing subrecipient financial reports/invoices if needed, and providing assistance to the PI in other monitoring efforts. Issuing management decisions for audit findings. Ensuring that subrecipient monitoring policies and procedures comply with federal and other applicable regulations and are applied consistently. Providing further training and guidance in interpreting regulations and subrecipient award terms and conditions.

5. Practice Activities Please discuss each of these topics with your neighbor for a couple minutes and then we will come back together and share our thoughts.

CONTRACTOR Practice Activity Scenario 1:
Subrecipient vs. Contractor – Scenario 1 Scenario 1: TCNJ wants to agree to co-host a conference with another non-profit organization. The statement of work provides that the organization would coordinate the production of meeting materials, conference meals, conference meeting rooms and AV equipment. TCNJ was to reimburse the organization for half of those costs. Organization is not a “Vendor” (non-profit)…. BUT TCNJ is not transferring any programmatic effort to the organization CONTRACTOR

SUBRECIPIENT Practice Activity Scenario 2:
Subrecipient vs. Contractor – Scenario 2 Scenario 2: A colleague at a private institution (University) has effort on a project and a statement of work that states he/she will be obtaining, analyzing and interpreting data. TCNJ wants to list this individual as a Co-PI on the project. The collaborating institution prefers to be paid via a Purchase Order. Preference of the collaborating institution is not determinative SUBRECIPIENT

SUBRECIPIENT Practice Activity Scenario 3:
Subrecipient vs. Contractor – Scenario 3 Scenario 3: A project requires software specific to the purpose of the award. The software must be developed, and the development is to be performed by another educational institution. That institution has responsibility for making decisions about how to develop the software to specifically meet the purpose of the project. Second institution had responsibility for making programmatic decisions in developing the software that would be central to the overall success of the project SUBRECIPIENT

CONTRACTOR Practice Activity Scenario 4A:
Subrecipient vs. Contractor – Scenario 4 Scenario 4A: A local Jobs Program (JP) will provide publicity, rooms, equipment, food/refreshments and parking for workshops. TCNJ will reimburse JP for costs associated with providing those items. No programmatic effort CONTRACTOR

SUBRECIPIENT Practice Activity Scenario 4B:
Subrecipient vs. Contractor – Scenario 4 Scenario 4B: JP staff will communicate weekly with TCNJ Staff. JP will assist in development of research protocols and materials. JP will assist in the analyses, reporting and dissemination of results. TCNJ will reimburse for extended contract hours for JP staff to participate in the project. TCNJ will reimburse JP for project materials. JP assumed programmatic activities that would be central project SUBRECIPIENT

6. Key Takeaways

Key Takeaways Subrecipient Monitoring
Administrative Requirements – Subrecipient Monitoring Subrecipient Monitoring Must review requirements for pass through entities. TCNJ is required to document their risk assessments. Various levels of training and technical assistance can be used to support and monitor the subrecipient depending on risk assessment. Fixed amount subawards can be made up to a threshold. Subrecepients differ from contractors.

7. Resources

Resources Where to get Help Reference updated policies and procedures on the OAGSR website ( Sign up for additional trainings Review the Uniform Guidance Language ( idx?tpl=/ecfrbrowse/Title02/2cfr200_main_02.tpl ) Ask your colleagues Contact OAGSR Green Hall, Room 202 P) E) Contact the Office of the Treasurer Green Hall, Room 207 P)

8. Appendix

Introduction to the Uniform Guidance
Uniform Guidance Training Series Day One, Part One Introduction to the Uniform Guidance 11/10/2014 Organization - Subparts Acronyms and Definitions Subpart A General Provisions Subpart B Pre-Federal Award Requirements and Contents of Federal Awards Subpart C Post Federal Award Requirements Subpart D Cost Principles Subpart E Audit Requirements Subpart F

Introduction to the Uniform Guidance
Uniform Guidance Training Series Day One, Part One Introduction to the Uniform Guidance 11/10/2014 Organization - Appendix to Part 200 Full Text of Notice of Funding Opportunity Appendix I Contract Provisions for Non-Federal Entity Contracts Under Federal Awards Appendix II Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs) Appendix III Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations Appendix IV State/Local Government and Indian Tribe-Wide Central Service Cost Allocation (Transfer) Plans Appendix V Public Assistance Cost Allocation (Transfer) Plans Appendix VI States and Local Government and Indian Tribe Indirect Cost Proposals Appendix VII Nonprofit Organizations Exempted From Subpart E— Cost Principles of Part 200 Appendix VIII Hospital Cost Principles Appendix IX Data Collection Form (Form SF–SAC) Appendix X Compliance Supplement Appendix XI

11/10/2014 Overview of Uniform Guidance & Institutional Impact Cost principles - direct costs Guidelines promote the clarification as well as standardization of the direct cost allowability across institutions. Final OMB Uniform Guidance Institutional Impact and Implications Further clarifications made in allocability and allowability of certain direct costs. A single common cost principles circular creates common accounting standards for all grant recipients, regardless of institutional type.

11/10/2014 Overview of Uniform Guidance & Institutional Impact Cost principles - Administrative support Institutions can charge directly allocable administrative support as a direct cost. Final OMB Uniform Guidance Institutional Impact and Implications In order for clerical costs to be allowable as a direct charge, the Federal awarding agency’s prior approval is required. Additional language was added to allow for this approval after the initial budget approval in order to allow for flexibility in implementation. Institutions may charge administrative and clerical salaries, as well as other items of cost, directly to a Federal award when it is appropriate, allocable and meets the conditions outlined in the Federal guidance. The burden for justifying direct costs as allocable to an award remains with the institution.

11/10/2014 Overview of Uniform Guidance & Institutional Impact Cost principles - Computing devices This change includes the cost of certain computing devices as allowable direct cost supplies. Final OMB Uniform Guidance Institutional Impact and Implications Computing devices are subject to the less burdensome administrative requirements of supplies (as opposed to equipment). The acquisition cost must be less than the lesser of the capitalization level established by the non- Federal entity for financial statement purposes or $5,000, regardless of the length of its useful life. Computing devices not considered a depreciable asset by an institution’s capitalization policy may be charged and treated as supplies. The burden of obtaining prior approval for such purchases is reduced. However, institutions must follow the same practices for determining and documenting allocability (direct versus indirect use) when charging computing devices to sponsored awards.

Overview of Uniform Guidance & Institutional Impact 11/10/2014 Post-award requirements - Cost sharing Establishes positive cost sharing policy, which limits when cost sharing can be required as well as eliminates cost share as a factor during the review of an application. Final OMB Uniform Guidance Institutional Impact and Implications Cost sharing can only be required when clearly defined in the funding opportunity notice. Voluntary committed cost sharing should not be used as a factor in the review of applications. Voluntary committed cost sharing is prohibited for Federal project proposals except where otherwise required by statute. Federally required institutional cost share will be limited. Institutions will have additional regulations-based support to discourage voluntary cost share commitments.

11/10/2014 Overview of Uniform Guidance & Institutional Impact Cost principles - Time & Effort (T&E) As long as institutions comply with general principles of T&E, they can apply unique practices of maintenance, which will lessen the administrative burden. Final OMB Uniform Guidance Institutional Impact and Implications Non-Federal entities are required to maintain high standards for internal controls over salaries and wages but are provided additional flexibility on how to implement processes to meet those standards. Reporting requirements are consolidated across entities and specific methodologies for IHEs are eliminated. Different allowable and unallowable compensation activities are defined and include special considerations for different types of non- Federal entities. The general principles of time and effort still apply, but all institution types have the ability to implement independent practices for verifying payroll as long as they follow the Federal guidelines. The complex language and example methods have been eliminated.

11/10/2014 Overview of Uniform Guidance & Institutional Impact Cost principles - procurement Institutions will have additional procurement standards such as required competition and equipment screening requirements. Final OMB Uniform Guidance Institutional Impact and Implications A “bearclaw” of procurement method requirements is outlined. The threshold for small purchase procedures is raised to $150,000 to be consistent with the simplified acquisition threshold in the Federal Acquisition Regulation (FAR). Non-Federal entities are required to avoid duplicative purchases and encouraged to enter into agreements for shared goods and services. All A-110 language on procurement is replaced by A-102 section .36. Minor clarification to language requires non- Federal entities to maintain “oversight” rather than a “system” that ensures contractor performance. The cost or price analysis threshold, set in accordance with the simplified acquisition threshold, will streamline institutional procurement processes. However, other actions will require additional administration in procurement areas, such as inter-entity agreements for shared services. Institutional P-Card policies, especially for purchases over $3,000 may be in conflict with Federal requirements.

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