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As not-for-profits wind down the current year and solidify planning for the upcoming year, there is a new category to add to your checklist, subrecipient monitoring. The Uniform Grant Guidance has established enhanced subrecipient monitoring that directs awarding agencies (whether they are federal or pass-through agencies) to rate all current or potential subrecipients. So, would your not-for-profit be considered a subrecipient? If your organization has a contract or grant agreement in place with the state, county or another organization and those monies have to be included on your Schedule of Expenditures of Federal Awards, then your organization would be considered a subreceipient. What is subrecipient monitoring? Subrecipient monitoring includes classifying organizations into “Low-Risk” or “High-Risk” categories based on factors in the list below, as well as whether the organization has had audit noncompliance, a federal finding, grant nonperformance, a qualified audit report, the level of grant complexity, etc.
The factors that awarding agencies are to evaluate regarding each subrecipient include:
The awarding agencies will then use the information obtained to determine which subrecipients will be awarded funding and which subrecipients may need additional guidance. The Uniform Grant Guidance affords additional monitoring tools that an awarding agency should consider prior to making final awarding decisions. These include the following:
The federal awarding agency or pass-through entity may impose additional specific award conditions as deemed necessary based upon the results of the risk assessment.
Why is subrecipient monitoring important to your organization? If your organization is placed in the “High-Risk” category by an awarding agency, it will most likely require that your organization provide additional documentation, be subjected to additional scrutiny and potential reduction or loss of grant monies. As we all know, loss of any funding stream can be detrimental to an organization. What can your organization do to prepare? Important areas to focus on include documenting your internal controls, addressing any deficiencies in your most recent audit, communicating with your financial statement auditors, having your organization’s records and books ready for inspection, and communicating with your contracting agencies regarding their suggested improvements.
Contact us if you have any questions regarding the Uniform Grant Guidance and visit our Not-for-Profit Industries page to learn more about the services that the Schneider Downs team can offer.
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