Subject:  Subrecipients No.        04-1
Date:    January 26, 2004

(Note:  This Important Notice is being sent to Fiscal Officers, Chairpersons, Deans and Chancellors.  Please forward to others who have a need to know.)

This Important Notice is issued to outline the subrecipient process at Indiana University and the responsibilities for subrecipient monitoring.  Subrecipient agreements are sometimes referred to as subcontracts or consortium agreements.  Federal OMB Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations”, establishes audit requirements for federal and federal pass through funds received at Indiana University and other institutions of higher education.  Under a prime federal award, Indiana University may desire work to be completed by an outside entity.  Section §___.210 of A-133 entitled “Subrecipient and Vendor Determinations” gives guidance in assessing if a subrecipient relationship exists.  The Indiana University practice is to extend similar requirements and definitions to non-federal subawards.


Definition of a Subrecipient:  A non-Federal entity that expends Federal awards from a pass-through entity to carry out a Federal program.  A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency.


Characteristics of a subrecipient:

·         Receiving entity determines who is eligible to receive what Federal financial assistance;

·         Has its performance measured against whether the objectives of the Federal program are met;

·         Has responsibility for programmatic decision making;

·         Has responsibility for adherence to applicable Federal programs compliance requirements; and

·         Uses the Federal funds to carry out a program of the organization as compared to providing goods or services for a program of the pass-through entity.


Definition of a Vendor:  A dealer, distributor, merchant or other seller providing goods or services that are required for the conduct of a Federal program.  These goods or services may be for an organization’s own use or for the use of beneficiaries of the Federal program. 


Characteristics of a vendor:

·         Provides the goods and services within normal business operations;

·         Provides similar goods or services to many different purchasers;

·         Operates in a competitive environment;

·         Provides goods or services that are ancillary to the operation of the Federal program; and

·         Is not subject to the compliance requirements of the Federal program.


Realizing that there may be unusual circumstances or exceptions to the above, you are encouraged to work with your research office in making the determination of whether a subrecipient or vendor relationship exists. Vendor agreements are handled by the Purchasing Department upon the initiation of a requisition by the department.  Vendor agreements may be for consulting services, contractual agreements, or other fee for service arrangements and will follow normal procurement laws and regulations. 


To comply with the requirements of OMB Circular A-133 for federal projects and to provide sound fiscal stewardship on all sponsored projects, Indiana University is responsible for monitoring subrecipients.  The table below details the roles and responsibilities of subrecipient monitoring and subaward administration at our institution.







Determine if a subrecipient relationship exists.

When submitting a proposal:
IU Project Director,
The research office for your campus:
    IUPUI – Research and Sponsored Programs
    IUB and Regionals – Sponsored Research Services

Collect the following information from the proposed subrecipient:

  • Scope of work
  • Budget and budget justification
  • Institutional authorization
  • Copy of indirect cost (F&A) rate agreement

IU Project Director before routing proposal to the IU research office

Review subrecipient’s budget to ensure that the funding agency’s expense guidelines are followed.  Work with proposed subrecipient to correct budget problems and to ensure that the correct indirect cost rate is proposed.

The research office for your campus:
     IUPUI – Research and Sponsored Programs
     IUB and Regionals – Sponsored Research Services

Issue Subawards (also may be called Subcontracts or Consortium Agreements), negotiate terms, issue amendments, provide IU authorizing signature.

IUPUI awards – Research and Sponsored Programs
IUB and regional campus awards  – Contract & Grant Administration

Review subrecipient invoices to ensure that the funding agency’s cost policies are followed and that expenditures fall within the dollar amount and time period of the agreement. 

IU Project Director, Department Fiscal Officer, Account Manager or Delegate

Review subrecipient invoices to ensure that the appropriate program milestones are being met relative to the rate of expenditures.

IU Project Director, Department Fiscal Officer, Account Manager or Delegate

Collect program/technical reports as required by the subaward agreement and the prime funding agreement.

IU Project Director, Department Fiscal Officer, Account Manager or Delegate

Collect cost share verification (if required) and report subaward expenditures to prime sponsor.

Contract & Grant Administration

Ensure that the correct subcontract object code and indirect cost rate (F&A) have been applied to the IU account. 

Departmental Fiscal Officer or Account Manager, Contract & Grant Administration

Collect A-133 audit reports or audited financial reports from all subrecipients of federal funds received through IU.

Contract & Grant Administration

Determine if there are disallowances.

Contract & Grant Administration

Collect refunds from subrecipient if disallowances are made.

Department Fiscal Officer or Account Manager with assistance from Contract & Grant Administration

Cover overdrafts caused by disallowances.


Additional monitoring may be required if problems are found in the normal review steps listed above.  Monitoring techniques may include but are not limited to:  review of indirect cost (F&A) rate agreements, review of fringe benefit rates, desk audits of expenditures, and site visits. 

Determined by Contract & Grant Administration in consultation with all of the above parties at the time of instituting additional monitoring procedures.

 Additional References

·        OMB Circular A-133  http://www.whitehouse.gov/omb/circulars/a133/a133.html    

·        Important Notice 89-14, Subcontract Agreements with Small Organizations   

·        FMS, Contract & Grant Administration, A-133  http://www.ovpra.indiana.edu/cg/a133.asp     

·        Research Gateway  www.research.indiana.edu    



Financial Management Services Phone:  (812) 855-4884 Email:  cgadmin@indiana.edu
Research and Sponsored Programs - Indianapolis Phone:  (317) 274-8285 Email:  rspinfo@iupui.edu
Sponsored Research Services - Bloomington Phone:  (812) 855-0516 Email:  resdev@indiana.edu
Office of the Vice President for Research Phone:  (812) 855-3963 Email:  stemarti@indiana.edu