NUMBER:     8.3.12                                                                               DATE:  01/30/04

PURPOSE

The purpose of this policy is to communicate the University of Arkansas for Medical Sciences’ guidelines for the programmatic and financial monitoring of its sponsored research award subrecipients.

POLICY

OMB Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations” defines pass-through entities, recipients, subrecipients and vendors in Sub-part B. In general terms, a pass-through entity is one that is either a direct recipient or sub-recipient of Federal funds that passes through to another entity (herein after referred to as the subrecipient) a portion of the work and a portion of the funding of a federally sponsored agreement. In a case where the university acts as the pass-through entity to a subrecipient, Sub-part D of A-133 sets forth the University’s responsibilities for subrecipient monitoring.

The determination of the potential need for a subaward to a business/organization is normally made at the proposal stage. The Principal Investigator identifies the scope of work to be performed by the potential subawardee and must be prepared to justify the selection of the potential subawardee. When selecting a potential subawardee, the principal Investigator should be aware of the “Codes of Conduct” section (subpart C.42) of OMB Circular A-110 (“Uniform Administrative Requirements for Grants and Agreements for Institutions of Higher education, Hospitals, and Other Non-Profit Organizations”).

Monitoring and Compliance Responsibilities

The University is responsible for monitoring the activities of subrecipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved.

• Ensure that subrecipients expending $500,000 or more in Federal awards during the subrecipient’s fiscal year comply with OMB Circular A-133.
• Ensuring that appropriate corrective action is taken within six (6) months after receipt of the subrecipient audit report in instances of noncompliance with Federal laws and regulations.
• Considering whether subrecipient audits necessitate adjustments of the University’s own records.
• Requiring that subrecipients permit independent auditors to have access to the records and financial statements necessary in order for the University to comply with A-133.
• Providing the Catalog of Federal Domestic Assistance (CFDA) number to the subrecipient when issuing a subaward or subsequent change.

The following units are responsible for the monitoring of subrecipients and the receipt of subrecipient audit reports:

• The Office of Research and Sponsored Programs (ORSP) is responsible for the development of the subaward and for inclusion of all applicable OMB requirements, disclosures, and for obtaining the proper signatures on the subaward.  ORSP is also responsible for the risk assessment of subrecipients and verifying that they are not debarred or suspended from receiving federal funds.
• Principal Investigators/Department Administrators are responsible for monitoring periodic progress reports and invoices from the subrecipients for compliance with the terms of the contract. Invoices should be checked to ensure that they are reflective of progress. Non-compliance with technical reporting requirements or dissatisfaction with level of subrecipient progress should be reported immediately to ORSP and the Grants Accounting office.

Monitoring the subcontractor’s compliance with audit, financial and equipment reporting requirements is the responsibility of the Grants Accounting Office. These responsibilities are outlines below.

• Ensure that a current certification or A-133 audit report is submitted annually.
• Review reports and letters submitted by subrecipients for instances of noncompliance or reported findings to determine whether adjustments are need to the University’s records.
  In instances of noncompliance, Grants Accounting will seek to obtain assurance from the subrecipient that corrective action efforts have taken place and shall review management’s corrective action plan.
• Retain certifications and report for a period of three years or longer if required by the sponsor after termination of the subcontract.
• Send letters and make follow-up phone calls requesting certifications or A-133 reports not received for the prior fiscal year within two weeks of the initial request for certifications. The audit report is due nine months after the end of the audit periods (typically the end of an organization’s fiscal year).
• If the subrecipient fails to establish that corrective action has been taken, the Grants Accounting Office will refer the subrecipient to the Grants Administration Advisory Committee for a management decision, where the proper course of action will be determined. In noted instances of non-compliance, the Grants Accounting Office will maintain documentation of action taken and results of such action.