721.1 Federal Awards Administration Policy

Federal Awards Administration Policy 

I.               PURPOSE

The purpose of this policy is to ensure compliance with the requirements of the federal Uniform Guidance regulations by establishing uniform administrative requirements, cost principles, and audit requirements for federal grant awards received by the school district.

II.             DEFINITIONS

1. Grants
   1. “State-administered grants” are those grants that pass through a state agency such as the Minnesota Department of Education (MDE).
   2. “Direct grants” are those grants that do not pass through another agency such as MDE and are awarded directly by the federal awarding agency to the grantee organization. These grants are usually discretionary grants that are awarded by the U.S. Department of Education (DOE) or by another federal awarding agency.
      [Note: All of the requirements outlined in this policy apply to both direct grants and state-administered grants.]
2. “Non-federal entity” means a state, local government, Indian tribe, institution of higher education, or nonprofit organization that carries out a federal award as a recipient or subrecipient.
3. “Federal award” has the meaning, depending on the context, in either paragraph 1. or 2. of this definition:
   1. The federal financial assistance that a non-federal entity receives directly from a federal awarding agency or indirectly from a pass-through entity, as described in 2 C.F.R. § 200.101 (Applicability); or
   2. The cost-reimbursement contract under the federal Acquisition Regulations that a non-federal entity receives directly from a federal awarding agency or indirectly from a pass-through entity, as described in 2 C.F.R. § 200.101 (Applicability).
   3. The instrument setting forth the terms and conditions. The instrument is the grant agreement, cooperative agreement, other agreement for assistance covered in paragraph (b) of 2 C.F.R. § 200.40 (Federal Financial Assistance), or the cost- reimbursement contract awarded under the federal Acquisition Regulations.
   4. “Federal award” does not include other contracts that a federal agency uses to buy goods or services from a contractor or a contract to operate federal-government- owned, contractor-operated facilities.
4.  “Contract” means a legal instrument by which a non-federal entity purchases property or services needed to carry out the project or program under a federal award. The term, as used in 2 C.F.R. Part 200, does not include a legal instrument, even if the non-federal entity considers it a contract, when the substance of the transaction meets the definition of a federal award or subaward.
5. Procurement Methods
   1. “Procurement by micro-purchase” is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (generally $10,000 except as otherwise discussed in 48 C.F.R. Subpart 2.1 or as periodically adjusted for inflation).
   2.  “Procurement by simplified acquisitions procedures” are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than $175,000 (periodically adjusted for inflation).
   3.  “Procurement by sealed bids (formal advertising)” is a publicly solicited and a firm, fixed-price contract (lump sum or unit price) awarded to the responsible bidder whose bid, conforming to all the material terms and conditions of the invitation for bids, is the lowest in price.
   4. 4“Procurement by competitive proposals” is normally conducted with more than one source submitting an offer, and either a fixed-price or cost- reimbursement type contract is awarded. Competitive proposals are generally used when conditions are not appropriate for the use of sealed bids.
   5. “Procurement by noncompetitive proposals” is procurement through solicitation of a proposal from only one source.
6. “Equipment” means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes, or $5,000.
7. “Compensation for personal services” includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the federal award, including, but not necessarily limited to, wages and salaries. Compensation for personal services may also include fringe benefits which are addressed in 2 C.F.R. § 200.431 (Compensation - Fringe Benefits).
8. Post-retirement health plans” refer to costs of health insurance or health services not included in a pension plan covered by 2 C.F.R. § 200.431(g) for retirees and their spouses, dependents, and survivors.
9. “Severance  pay”  is a payment in addition to regular salaries and wages by the non- federal entities to workers whose employment is being terminated.
10. “Direct costs” are those costs that can be identified specifically with a particular final cost objective, such as a federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.
11. “Relocation costs” are costs incident to the permanent change of duty assignment (for an indefinite period or for a stated period not less than 12 months) of an existing employee or upon recruitment of a new employee.
12. “Travel costs” are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the school district.

I.          ACCEPTABLE METHODS OF PROCUREMENT

1. General Procurement Standards - The school district must use its own documented procurement procedures which reflect applicable state laws, provided that the procurements conform to the applicable federal law and the standards identified in the Uniform Guidance.
2. Methods of Procurement. The school district must use one of the following methods of procurement:
   1. 1.              Procurement by micro-purchases. To the extent practicable, the school district must distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if the school district considers the price to be reasonable.
   2. 2.              Procurement by simplified acquisitions      procedures. If simplified acquisitions procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.
   3. 3.              Procurement by sealed bids (formal advertising).
   4. 4.              Procurement by competitive proposals. If this method is used, the following requirements apply:

• Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical;
• Proposals must be solicited from an adequate number of qualified sources;
• The school district must have a written method for conducting technical evaluations of the proposals received and for selecting recipients;
• Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and
• The school district may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method where price is not used as a selection factor can only be used in procurement of A/E professional services; it cannot be used to purchase other types of services, though A/E firms are a potential source to perform the proposed effort.
  5. Procurement by noncompetitive proposals. Procurement by noncompetitive proposals may be used only when one or more of the following circumstances apply:
   
• The item is available only from a single source;
• The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
• The DOE or MDE expressly authorizes noncompetitive proposals in response to a written request from the school district; or
• After solicitation of a number of sources, competition is determined inadequate.

C.Suspension and Debarment - Non-federal entities are prohibited from contracting with or making subawards under “covered transactions” to parties that are suspended or debarred or whose principals are suspended or debarred.

1.  “Covered transactions” include procurement contracts for goods and services awarded under a grant or cooperative agreement that are expected to equal or exceed $25,000. This verification may be accomplished by: Checking the Sam.gov website maintained by the General Services Administration (GSA)

• Collecting a certification from the entity, or
• Adding a clause or condition to the covered transaction with that entity. The subrecipient cannot make a contract to parties listed on the Sam.gov website as debarred, suspended, or otherwise excluded by federal agencies.

2. All non-procurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 C.F.R. § 180.215.

IV.    FINANCIAL MANAGEMENT REQUIREMENTS

1. Financial Management. The school district’s financial management systems, including records documenting compliance with federal statues, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award.
2. Payment. The school district can be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement between the school district and the financial management systems that meet the standards for fund control.
   Advance payments to a school district must be limited to the minimum amounts needed and timed to be in accordance with the actual, immediate cash requirements of the school district in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The school district must make timely payment to contractors in accordance with the contract provisions.
3.  Internal Controls. The school district must establish and maintain effective internal control over the federal award that provides reasonable assurance that the school district is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
   The school district must comply with federal statutes, regulations, and the terms and conditions of the federal award.
   The school district must also evaluate and monitor the school district’s compliance with statutes, regulations, and the terms and conditions of the federal award.
   The school district must also take prompt action when instances of noncompliance are identified, including noncompliance identified in audit findings.
   The school district must take reasonable measures to safeguard protected personally, identifiable information considered sensitive consistent with applicable federal and state laws regarding privacy and obligations of confidentiality.
4. Financial and Budgetary Compliance
   1. Monitoring Grant Funds – Departments may use some internal mechanism to monitor grant revenues, expenditures, and budgetary compliance, at the grant level. The Financial system is set up to uniquely track federal awards from nonfederal by using the UFARS coding system.
   2. Grant Budgets – The terms of each specific grant will dictate whether any budget transfers between budgeted line items will be permitted. In no case will the Program Director be authorized to exceed the total budget authority provided by the grant.

I.       ALLOWABLE USE OF FUNDS AND COST PRINCIPLES

1. Allowable Use of Funds. The school district administration and board will enforce appropriate procedures and penalties for program, compliance, and accounting staff responsible for the allocation of federal grant costs based on their allowability and their conformity with federal cost principles to determine the allowability of costs.
2. Definitions
   1. “Allowable cost” means a cost that complies with all legal requirements that apply to a particular federal education program, including statutes, regulations, guidance, applications, and approved grant awards.
   2. “Education Department General Administrative Regulations (EDGAR)” means a compilation of regulations that apply to federal education programs. These regulations contain important rules governing the administration of federal education programs and include rules affecting the allowable use of federal funds (including rules regarding allowable costs, the period of availability of federal awards, documentation requirements, and grants management requirements). EDGAR can be accessed at: http://www2.ed.gov/policy/fund/reg/edgarReg/edgar.html.
   3. “Omni Circular” or “2 C.F.R. Part 200s” or “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” means federal cost principles that provide standards for determining whether costs may be charged to federal grants.
   4. “Advance payment” means a payment that a federal awarding agency or pass through entity makes by any appropriate payment mechanism, including a predetermined payment schedule, before the non-federal entity disburses the funds for program purposes.
3. Allowable Costs. The following items are costs that may be allowable under the 2 C.F.R. Part 200s under specific conditions:
   1. Advisory councils;
   2. Audit costs and related services;
   3. Bonding costs;
   4. Communication costs;
   5. Compensation for personal services;
   6. Depreciation and use allowances;
   7. Employee morale, health, and welfare costs;
   8. Equipment and other capital expenditures;
   9. Gains and losses on disposition of depreciable property and other capital assets and substantial relocation of federal programs;
   10. Insurance and indemnification;
   11. Maintenance, operations, and repairs;
   12. Materials and supplies costs;
   13. Meetings and conferences;
   14. Memberships, subscriptions, and professional activity costs;
   15. Security costs;
   16. Professional service costs;
   17. Proposal costs;
   18. Publication and printing costs;
   19. Rearrangement and alteration costs;
   20. Rental costs of building and equipment;
   21. Training costs; and
   22. Travel costs.
4. Costs Forbidden by Federal Law. 2 CFR Part 200s and EDGAR identify certain costs that may never be paid with federal funds. The following list provides examples of such costs. If a cost is on this list, it may not be supported with federal funds. The fact that a cost is not on this list does not mean it is necessarily permissible. Other important restrictions apply to federal funds, such as those items detailed in the 2 CFR Part 200s; thus, the following list is not exhaustive:
   1. Advertising and public relations costs (with limited exceptions), including promotional items and memorabilia, models, gifts, and souvenirs;
   2. Alcoholic beverages;
   3. Bad debts;
   4. Contingency provisions (with limited exceptions);
   5. Fundraising and investment management costs (with limited exceptions);
   6. Donations;
   7. Contributions;
   8. Entertainment (amusement, diversion, and social activities and any associated costs);
   9. Fines and penalties;
   10. General government expenses (with limited exceptions pertaining to Indian tribal governments and Councils of Government (COGs));
   11. Goods or services for personal use;
   12. Interest, except interest specifically stated in 2 C.F.R. § 200.441 as allowable;
   13. Religious use;
   14. The acquisition of real property (unless specifically permitted by programmatic statute or regulations, which is very rare in federal education programs);
   15. Construction (unless specifically permitted by programmatic statute or regulations, which is very rare in federal education programs); and
   16. Tuition charged or fees collected from students applied toward meeting matching, cost sharing, or maintenance of effort requirements of a program.
5. Program Allowability
   1. Any cost paid with federal education funds must be permissible under the federal program that would support the cost.
   2. Many federal education programs detail specific required and/or allowable uses of funds for that program. Issues such as eligibility, program beneficiaries, caps, or restrictions on certain types of program expenses, other program expenses, and other program specific requirements must be considered when performing the programmatic analysis.
   3. The two largest federal K-12 programs, Title I, Part A, and the Individuals with Disabilities Education Act (IDEA), do not contain a use of funds section delineating the allowable uses of funds under those programs. In those cases, costs must be consistent with the purposes of the program to be allowable.
6. Federal Cost Principles
   1. 1.     The Omni Circular defines the parameters for the permissible uses of federal funds. While many requirements are contained in the Omni Circular, it includes five core principles that serve as an important guide for effective grant management. These core principles require all costs to be:

• Necessary for the proper and efficient performance or administration of the program.
• Reasonable. An outside observer should clearly understand why a decision to spend money on a specific cost made sense considering the cost, needs, and requirements of the program.
• Allocable to the federal program that paid for the cost. A program must benefit in proportion to the amount charged to the federal program – for example, if a teacher is paid 50% with Title I funds, the teacher must work with the Title I program/students at least 50% of the time. Recipients also need to be able to track items or services purchased with federal funds so they can prove they were used for federal program purposes.
• Authorized under state and local rules. All actions carried out with federal funds must be authorized and not prohibited by state and local laws and policies.
• Adequately documented. A recipient must maintain proper documentation so as to provide evidence to monitors, auditors, or other oversight entities of how the funds were spent over the lifecycle of the grant.

G. Program Specific Fiscal Rules. The Omni Circular also contains specific rules on selected items of costs. Costs must comply with these rules in order to be paid with federal funds.

1. All federal education programs have certain program specific fiscal rules that apply. Determining which rules apply depends on the program; however, rules such as supplement, not supplant, maintenance of effort, comparability, caps on certain uses of funds, etc., have an important impact when analyzing whether a particular cost is permissible.
2.  Many state-administered programs require local education agencies (LEAs) to use federal program funds to supplement the amount of state, local, and, in some cases, other federal funds they spend on education costs and not to supplant (or replace) those funds. Generally, the “supplement, not supplant” provision means that federal funds must be used to supplement the level of funds from non- federal sources by providing additional services, staff, programs, or materials. In other words, federal funds normally cannot be used to pay for things that would otherwise be paid for with state or local funds (and, in some cases, with other federal funds).
3. Auditors generally presume supplanting has occurred in three situations:

• School district uses federal funds to provide services that the school district is required to make available under other federal, state, or local laws.
• School district uses federal funds to provide services that the school district provided with state or local funds in the prior year.
• School district uses Title I, Part A, or Migrant Education Program funds to provide the same services to Title I or Migrant students that the school district provides with state or local funds to nonparticipating students.
• These presumptions apply differently in different federal programs and also in schoolwide program schools.  Staff should be familiar with the supplement not supplant provisions applicable to their program.

H.  Approved Plans, Budgets, and Special Conditions

1. As required by the Omni Circular, all costs must be consistent with approved program plans and budgets.
2. Costs must also be consistent with all terms and conditions of federal awards, including any special conditions imposed on the school district’s grants.

I.   Training

1. The school district will provide training on the allowable use of federal funds to all staff involved in federal programs.
2. The school district will promote coordination between all staff involved in federal programs through activities, such as routine staff meetings and training sessions.

J.  Employee Sanctions. Any school district employee who violates this policy will be subject to discipline, as appropriate, up to and including the termination of employment.

I.   COMPENSATION – PERSONAL SERVICES EXPENSES AND REPORTING

1. Compensation – Personal Services
   Costs of compensation are allowable to the extent that they satisfy the specific requirements of the Uniform Guidance and that the total compensation for individual employees:
   1. 1.     Is reasonable for the services rendered and conforms to the established written policy of the school district consistently applied to both federal and non-federal activities; and
   2. 2.     Follows an appointment made in accordance with a school district’s written policies and meets the requirements of federal statute, where applicable.Unless an arrangement is specifically authorized by a federal awarding agency, a school district must follow its written non-federal, entity-wide policies and practices concerning the permissible extent of professional services that can be provided outside the school district for non-organizational compensation.
2. Compensation – Fringe Benefits
   1. 1.     During leave. The costs of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable if all of the following criteria are met:

• They are provided under established written leave policies;
• The costs are equitably allocated to all related activities, including federal awards; and
• The accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the school district.
  1. The costs of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker’s compensation insurance (except as indicated in 2 C.F.R. § 200.447(d)); pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits must be allocated to federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such federal awards and other activities and charged as direct or indirect costs in accordance with the school district’s accounting practices.
  2. Actual claims paid to or on behalf of employees or former employees for workers’ compensation, unemployment compensation, severance pay, and similar employee benefits (e.g., post-retirement health benefits) are allowable in the year of payment provided that the school district follows a consistent costing policy.
  3. Pension plan costs may be computed using a pay-as-you-go method or an acceptable actuarial cost method in accordance with the written policies of the school district.
  4. Post-retirement costs may be computed using a pay-as-you-go method or an acceptable actuarial cost method in accordance with established written policies of the school district.
  5. Costs of severance pay are allowable only to the extent that, in each case, severance pay is required by law; employer-employee agreement; established policy that constitutes, in effect, an implied agreement on the school district’s part; or circumstances of the particular employment.

C. Insurance and Indemnification. Types and extent and cost of coverage are in accordance with the school district’s policy and sound business practice.

D.Recruiting Costs. Short-term, travel visa costs (as opposed to longer-term, immigration visas) may be directly charged to a federal award, so long as they are:

1. Critical and necessary for the conduct of the project;
2. Allowable under the cost principles set forth in the Uniform Guidance;
3. Consistent with the school district’s cost accounting practices and school district policy; and
4. Meeting the definition of “direct cost” in the applicable cost principles of the Uniform Guidance.

E. Relocation Costs of Employees. Relocation costs are allowable, subject to the limitations described below, provided that reimbursement to the employee is in accordance with the school district’s reimbursement policy.

F. Travel Costs. Travel costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip and not to selected days of the trip, and results in charges consistent with those normally allowed in like circumstances in the school district’s non-federally funded activities and in accordance with the school district’s reimbursement policies.

Costs incurred by employees and officers for travel, including costs of lodging, other subsistence, and incidental expenses, must be considered reasonable and otherwise allowable only to the extent such costs do not exceed charges normally allowed by the school district in its regular operations according to the school district’s written reimbursement and/or travel policies.

In addition, when costs are charged directly to the federal award, documentation must justify the following:

1. Participation of the individual is necessary to the federal award; and
2. The costs are reasonable and consistent with the school district’s established travel policy.

Temporary dependent care costs above and beyond regular dependent care that directly results from travel to conferences is allowable provided the costs are:

1. A direct result of the individual’s travel for the federal award;
2. Consistent with the school district’s documented travel policy for all school district travel; and
3. Only temporary during the travel period.

I.               CASH MANAGEMENT REQUIREMENTS 

A.Rationale – The District must minimize the time elapsing between the transfer of funds from the grant oversite agency and the disbursement by the district whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Generally, the District receives payment from the grant oversite agency on a reimbursement basis.

B. Advance Payments – means a payment that a Federal awarding agency or pass- through entity makes by any appropriate payment mechanism, including a predetermined payment schedule, before the non-Federal entity disburses the funds for program purposes.

1. Must be deposited and maintained in insured accounts whenever possible.
2. Must be maintained in interest-bearing accounts, unless the following apply:

• The District receives less that $120,000 in Federal awards per year.
• The best reasonably available interest-bearing account would not be expected to earn interest in excess of $500 per year on Federal cash balances.
• Interest earned amounts up to $500 per year may be retained by the District for administrative expense. If the District earns any additional interest on Federal advance payments deposited in interest-bearing accounts, follow procedures stated in 2 CFR section 200.305(9).
• The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.

C. Reimbursement Based Payments – means program costs will be expended and disbursed prior to requesting reimbursement from the Federal awarding agency.

1. Cash draws will be initiated by Program Director and/or Finance Department who will determine the appropriate draw amount. Documentation of how the amount was determined will be retained and signed/dated.
2. Supporting documentation of the cash draw paperwork will be filed along with the approved paperwork described above and retained for audit purposes.

VIII.        SUBRECIPIENT MONITORING AND MANAGEMENT

 A. Rationale - The District may concurrently receive Federal awards as a recipient, a subrecipient, and a contractor, depending on the substance of its agreements with Federal awarding agencies and pass-through entities. Therefore, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.

B.  Definitions

1. Pass-through Entity (PTE) – A non-Federal entity that provides a subaward to a subrecipient to carry out part of a Federal program.
2. Subaward – An award provided by a PTE to a subrecipient to carry out part of a Federal award received by the PTE. It does not include payments to a contractor or payments to an individual that is a beneficiary of a Federal program. A subaward may be provided through any form of legal agreement, including an agreement that the PTE considers a contract.
3. Subrecipient – A non-Federal entity that receives a subaward from a PTE to carry out part of a Federal program; but does not include an individual that is a beneficiary of such program.
4. Contract – A legal instrument by which a non-Federal entity purchases property of services needed to carry out the project or program under a Federal award. The term as used in Part 2 CFR does not include a legal instrument, even if the non-Federal entity considers a contract, when the substance of the transaction meets the definition of a Federal award or subaward.
5.  Contractor – An entity that receives a contract, i.e. a legal instrument by which a non-Federal entity purchases property or services needed to carry out the project or program under Federal award.

 

C. Policy - Subrecipient/Contractor Determination

1. A non-Federal entity may concurrently receive Federal awards as a: Recipient, Subrecipient, and/or Contractor. PTE must make case-by-case determination whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a Subrecipient, or Contractor.

2. The differences between Subrecipient and Contractor are as follows:

Subrecipient	Contractor
Creates a Federal assistance relationship	Purpose is to obtain goods and services for the District’s own use and creates a procurement relationship
Determines who is eligible to receive what Federal assistance	Provides the good and services within normal business operations
Has responsibility for programmatic decision making	Normally operates in a competitive environment
Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and	Provides good or services that are ancillary to the operations of the Federal program; and
In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing stature, as opposed to providing goods or services for the benefit of the PTE	Is not subject to compliance requirements of the Federal program as a result of the agreement, though similar requirements may apply for other reasons

 

3. Subrecipient Requirements

• Federal award identification
• All requirements imposed by the Pass-through Entity (PTE)
• Any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility to the federal awarding agency including identification of any required financial or performance reports.
• An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal government or, if no such rate exists, either a rate negotiated between the PTE and the subrecipient or a de minimis indirect cost rate
• A requirement that the subrecipient permit the PTE and auditors to have access to the subrecipients records and financial statements, as necessary for the PTE to meet its requirements.
• Appropriate terms and conditions concerning the closeout of the subaward

4. Subrecipient Risk of Noncompliance

• Audit will evaluate subrecipient risk of noncompliance for purposes of determining appropriate subrecipient monitoring including consideration of such factors as:
  • Subrecipient experience with the same or similar subawards;
  • Results of previous audits, including whether the subrecipient receives a single audit and the extent to which the subaward has been audited as major;
  • Whether subrecipient has new personnel or substantially changed systems; and
  • Extent and results of Federal awarding agency monitoring.

5.     Required Subrecipient Monitoring Activities

• The pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass- through entity monitoring of the subrecipient must include:
  • Review financial and programmatic reports
  • Follow-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award through audits, on-site reviews, and other means.
  • Issue management decisions for audit findings pertaining to the federal award provided to the subrecipient.
• Pass-through entity monitoring of the subrecipient plan should be:
  • o   Clearly identify necessary activities and responsible parties
  • o   Review debarment lists
  • o   Allow for consistency throughout monitoring activities
  • o   Characteristics include data quality reviews, required progress reporting, site and desk reviews, potentially critical for large-scale projects, compliance auditing and develop corrective action plans.
  • o   Once the process has concluded, develop and implement an internal action plan to revise policies and procedures, enforce compliance with the internal requirements and execute ongoing monitoring
  • o   Utilize your internal auditors to conduct regular, detailed reviews
  • o   Document the execution of monitoring activities and corrective action taken.
• The remedies for non-compliance are as follows:
  • o   If non-federal entities fail to comply with the requirements, the PTE may impose additional conditions as described in statute §200.207
  • o   If non-compliance cannot be remedied with additional conditions, the PTE may take one or more of the following actions, as appropriate:
    • Temporarily withhold cash payments
    • Disallow all or part of cost of the activity not in compliance
    • Wholly or partly suspend or terminate the federal award
    • Recommend that the federal agency initiate suspension and debarment proceedings
    • Withhold further federal awards
    • Take other remedies that may be legally available