Subrecipient Monitoring

1. Overview
2. Subrecipient monitoring process
3. Approving and coding subaward invoices for payment
4. Advancing funds to subrecipients

1. Overview

   UC Berkeley is responsible for ensuring that sponsor funds provided by the University to other organizations via subaward agreements are spent in accordance with applicable laws and regulations. The breadth of this responsibility depends on whether a "subrecipient relationship" is created.

   A "subrecipient" is defined as an entity that receives federal assistance passed through from a prime recipient or another subrecipient to carry out or administer a program with the responsibility for programmatic decision making. This definition is synonymous with UC Berkeley's subawards. For the purpose of these procedures in Sections 2 through 4 below, subrecipients are defined to be non UC entities. The nine UC campuses and the Office of the President operate under the same UC guidelines defined by Office of the Presidents polices and procedures and are covered by the one A-133 report and the same A-133 review process.

   See further information on types of transactions subject to subrecipient monitoring at the Office of the Presidents web site Guidance on the Classification and Monitoring of Transactions with Third Parties under Federal Grants and Cooperative Agreements. If a subrecipient relationship is present with either a for-profit or not-for-profit entity, Office of Management and Budget (OMB) Circular A-133 requires oversight responsibilities that place the University in much the same position as if it were a federal agency dealing with its own primary recipients.

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2. Subrecipient monitoring process

   UC Berkeley relies on Principal Investigators (PIs) to be the primary control point for allowability, allocability and reasonableness of research expenses. The following controls at the department level address this requirement.

   1. PI and department staff working with Sponsored Project Office (SPO) assures that any necessary sponsor approvals are received before establishing a subaward. SPO has been delegated the authority to prepare and negotiate all subawards for collaborative research. The department and the PI need to work with the SPO throughout the development of the subaward.
   2. The administrator, program manager, or Principal Investigator reviews periodic progress reports, reviewing results delivered against statement of work in subaward. They also review invoices received from the subrecipient, including the monitoring of technical and programmatic activities and the assurance of allocability, allowability, and reasonableness of costs. Subcontractor invoices should be in enough detail to determine how the funds are being used.
   3. Departments should question costs which differ materially from the approved budget, or which appear unusual or unallowable, and should withhold payment until a satisfactory explanation is received or an appropriate audit of unresolved issues can be performed.
   4. Where required, the PI must obtain a written approval from the sponsor before the subcontractor can place an order for equipment.
   5. The Principal Investigator should approve all subrecipient invoices in consultation with the individual who is aware of the costs incurred in relation to the work performed on the subcontract. We recommend that the PI should document their approval of the subrecipient charges in writing on the invoice or on supporting documentation for the invoice.
   6. Departmental staff assures that final invoices are identified as such, and assist as needed in completing project closeout.

   UC Berkeley is also responsible for ensuring that subrecipients are in compliance with the requirements of appropriate standards for good business practices, including internal controls in accordance with OMB Circular A-133 Audits of States, Local Governments, and Non-Profit Organizations. SPO receives assurance from the subrecipient that it complies with A-133 and that the subrecipient will notify SPO of completion of required audits and of any adverse findings which impact the subaward.SPO receives a copy of the subrecipients A-133 audit report before entering into or renewing the subaward.Subawards are generally awarded for a period of no longer than one year at a time.

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3. Approving and coding subaward invoices for payment

   Invoices for subawards are received and reviewed by the department in charge of the sponsored project. They are approved through BFS by the campus department responsible for oversight of the awards. It is the responsibility of the PI or their delegate to ensure the work as indicated on the invoice has been performed in accordance with the terms of the subaward. It is the department's responsibility to ensure the first $25,000 of the subaward is coded to GL account 57811 which incurs overhead costs, and the remainder to GL account 57810 which is exempt from overhead, unless special overhead requirements are specified in the award.

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4. Advancing funds to subrecipients

   The federal government only allows for advance funding in rare circumstances when a subrecipient lacks sufficient working capital to perform the work (see Circular A-110, subpart C, 22(f).

   In the rare event that you make an advance to a subrecipient, please ensure the advances are made in accordance with University and federal regulations prior to advancing funds. You should only advance the amount of money needed to cover the short term working capital needs of the subrecipient organization. For example if the subaward is $100,000 for research work to be performed over a 12 month period, you should not advance the full amount of the subaward. If the subrecipient cannot finance their working capital needs on a month-to-month basis, you might advance $5,000 or the equivalent of one month's payroll needs.

   If an advance has been made, care needs to be exercised to ensure the work is performed in accordance with the terms of the subaward and documentation is provided by the subrecipient demonstrating the work has been completed. If the subrecipient has not provided documented support for the work performed, you should not advance further funds on this subaward until you are satisfied the subrecipient is performing the agreed upon research and you could prove to the federal government or other parties that the subrecipient has completed the work.

   Please note that most subrecipients can meet their short term working capital needs and can do business on a cost reimbursable basis rather than requiring an advance.

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