Does Your Organization Require an A-133 Single Audit? The Vendor vs. Subrecipient Distinction


By Erin Abbot

Making this distinction properly is very important for organizations receiving federal awards.  Subrecipients are subject to audit under A-133, while payments to a vendor for goods and services are not. The dollar amount of a transaction is not a determining factor. It is important to be aware that it is the nature of the relationship that determines whether or not an organization is a subrecipient or a vendor. To help your organization make this distinction, consider the following:

Characteristics of a Subrecipient

  • They determine who is eligible to receive assistance
  • Their performance is measured against meeting the objectives of the program
  • They have programmatic decision-making responsibility
  • They are responsible for applicable program compliance requirements
  • They use the funds to carry out a program of the organization as opposed to providing the services for a program of the awarding entity

Characteristics of a Vendor

  • They provide the service as part of their normal business operations
  • They provide a similar service to many different purchasers
  • They operate in a competitive environment
  • Their program compliance requirements do not pertain to the service provided

It is important to understand that determining whether your organization is a vendor or a subrecipient takes judgment. The answer is not always black and white, and there is not a single factor that will dictate whether one or the other relationship exists. However, keep in mind that if your organization transfers federal funds to another organization that is deemed a “subrecipient,” your organization is responsible for oversight of the recipient’s use of the funds. If the recipient is deemed a “vendor,” you have no formal oversight responsibilities.

Please contact one of our not-for-profit accounting professionals if you have questions about your vendor vs. subrecipient distinction or A-133 audit requirements.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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