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Grants Finance & Operations

Subrecipient Monitoring

What: External link Federal Regulation 2 CFR Part 200 requires that entities receiving funds under federal grants and contracts must be monitored.

Why: If IU issues a subrecipient agreement under a federal or federal pass through award, IU is required to monitor the subrecipient to assure compliance with federal regulations. Monitoring occurs on several levels and all parties play a role in monitoring for compliance. Monitoring helps to determine the risk of doing business with an entity not under our direct control. State Board of Accounts auditors, as part of the annual Single Audit review, will test IU's compliance with federal laws requiring monitoring of subrecipients. Other institutions have incurred audit findings for a lack of internal controls related to subrecipient monitoring.

How: Once a subaward is issued, several parties share the monitoring responsibility as outlined here:

Principal Investigator:

  • Maintain contact with subrecipient's project director to ensure that the appropriate program milestones are being met relative to the rate of expenditure.
  • Collect program/technical reports as required by the subaward agreement and the prime funding agreement.

Departmental fiscal officer or delegate:

  • Review subrecipient invoices to ensure:
  • 1) costs are related to the specific subaward
  • 2) costs are allocable, allowable, and reasonable
  • 3) costs do not exceed the amount awarded to the subrecipient
  • 4) costs are incurred within the time period of the approved subaward
  • 5) the appropriate approved indirect cost (F&A) rate has been applied to the invoice

  • Ensure that the correct IU subcontract object code is used on payments and that the correct indirect cost (F&A) rate has been charged to the IU account. By approving a subcontractor’s invoice you are certifying that you have monitored costs found on the invoice.

Office of Research Administration (Grants Finance & Operations):

  • Review a sample of high-risk subrecipient invoices and supporting documentation for compliance with subaward terms and conditions.
  • Respond to audit findings incurred under funds provided by Indiana University.

Agency Specific:

  • The requirement for subrecipient monitoring applies to all subawards issued under federal and federal pass through funds. Federal Regulation 2 CFR Part 200 does not apply to entities outside of the United States; however, monitoring expenditures incurred under foreign subcontracts is required.

  • Having an award from a non-federal source does not release the Principal Investigator and Department from monitoring subrecipients and subcontract expenditures. It does negate the requirement for Office of Research Administration to collect audit reports.

References:

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