Sneak Preview: Proposed Guidance Revisions Aim To Clarify Subrecipient Oversight
(The following was excerpted from a recent article in the Single Audit Information Service.) The Office of Management and Budget (OMB), in newly proposed revisions to the uniform grant guidance, aims to clarify confusion related to pass-through monitoring of subrecipient audits in the existing guidance, noting that a pass-through entity is responsible for seeking corrective actions only to a subrecipient’s audit findings that are specifically related to the subaward.
The proposed revisions, issued in the January 22 Federal Register, were required under a five-year review provision of the guidance (§200.209). They incorporate changes to implement goals under the President’s Management Agenda and its “Results-Oriented Accountability for Grants” Cross-Agency Priority Goal, as well as other administrative priorities. The revisions also implement statutory requirements and align Title 2 with other authoritative source requirements, and aim to clarify confusion about existing requirements.
According to §200.331(b) of the existing uniform guidance, pass-through entities must evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring, which may include consideration of several factors including the results of the subrecipient’s previous single audits, and the extent to which the same or a similar subaward to the subrecipient has been audited as a major program. This provision is not affected by the revisions.
However, provisions at §200.331(d) state that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that (1) the subaward is used for authorized purposes, in compliance with federal statutes, regulations and the terms and conditions of the subaward; and (2) subaward performance goals are achieved.
One of the monitoring activities at §200.331(d)(2) involves ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the subaward that were detected through audits, on-site reviews and other means. OMB, in the proposed revisions, would add new language here stating, “Other means may include written confirmation from the subrecipient related to the single audit already performed and any audit findings related to the particular subaward.” Adding this language would formalize OMB’s discussion of this topic in the Frequently Asked Questions pertaining to the uniform guidance updated in June 2017. Another such activity, at §200.331(d)(3), includes issuing a management decision for applicable (added under the proposed revisions) audit findings pertaining only to the federal award provided to the subrecipient from the pass-through entity.
OMB’s proposal also would add a new provision under the monitoring activities at a new §200.331(d)(4) to explain that the pass-through entity is not required to address all of the subrecipient’s audit findings, thereby seeking to ease pass-through oversight burdens. Specifically, the new language states that the pass-through entity “is only responsible for resolving audit findings specifically related to the subaward (i.e., nonsystemic) and not applicable to the entire subrecipient (i.e., systemic). If a subrecipient has a current single audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of federal funding, …, the pass-through entity may rely on the subrecipient’s auditors and cognizant agency for routine audit follow-up and management decisions. Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring and to monitor the status of the findings that are specifically related to the subaward issued by the pass-through entity.”
(The full version of this story has now been made available to all for a limited time here.)
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