Assessing Risk in Uncertain Times: Subrecipient Monitoring

One of the biggest challenges organizations are facing in the  single audit  are related to subrecipient management. According to the Office of Management and Budget’s Uniform Grant Guidance (UGG), organizations awarding Federal pass-through funds to subrecipients are responsible for their subrecipient’s budget and compliance, have an obligation to monitor their performance, and take action to ensure Federal funds are spent in a necessary and reasonable manner. Many of the problems that arise with subrecipient monitoring during the life of an award could be circumvented if pass-through entities had a more comprehensive understanding of any issues that could be associated with a subrecipient early in the process.  

The Guidance acknowledges this as well, and subsection § 200.332(b) requires all pass-through entities to evaluate “each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward.” This evaluation is performed to determine the appropriate level of subrecipient monitoring needed to ensure that Federal funds are used properly, and it often takes the form of a risk assessment. 

Performing a risk assessment prior to making a subaward is best practice. However, there is no standard risk assessment required by UGG that grant makers must follow specifically outside of evaluating the subrecipient’s experience with similar subawards, results of previous audits, new personnel or changed systems, and the extent and results of federal awarding agency monitoring. While the required information is gathered from this assessment, it does not necessarily insight for grant makers into what the working partnership with a subrecipient might be like, and as a result, are unaware of what additional levels of monitoring may be required.  

• 200.332(c) states that a prime may consider imposing specific subaward conditions, if appropriate to help higher-risk awardees stay on track with their performance reporting. Performing a comprehensive risk assessment can give you a quantitative score to base your monitoring conditions on and will provide you with an opportunity to establish clear communication and expectations with your subrecipients early in the relationship.  

Knowing what information could be the most helpful to assess in a preliminary subrecipient monitoring risk assessment is a daunting task, however. For many funders, it is often difficult to even know where to start.  

We have created a Subrecipient Monitoring Risk Assessment Tool to support you in designing a more comprehensive risk assessment for your potential subrecipients to increase your chances of performing well on the single audit. This tool gives you an opportunity to assign weighted numeric scores to activities or organizational characteristics that could be considered higher risk so you can evaluate what level of special conditions your organization may want to impose on an awardee to ensure compliance.  

We encourage you to use this tool as a starting point to modify, add, delete, or adjust as much as needed to ensure you are assessing with your organization’s needs in mind.   

We also have resources for you including specific tips and best practices for reducing the administrative burden associated with monitoring subrecipient progress, resources to help you perform a pre-award risk assessment, and resources on how to choose a partner that can help you monitor every aspect of your grants program.  

If you have any questions, or are looking for more tips, please don’t ever hesitate to reach out. We’re always here to help.