slide 1 revised subrecipient monitoring policies and procedures

Revised Subrecipient Monitoring

Policies and Procedures

JHU’s Responsibility Under Federal Regulation

Per OMB Circular A-133, a prime recipient of federal funding who passes-through a portion of that funding to another entity shall:

Advise subrecipients of requirements imposed by Federal laws, regulations, and the provisions of contracts or grant agreements

Monitor to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, and grant terms

Ensure that subrecipients meet A-133 audit requirements

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Working group developed proposed changes and circulated amongst the university for feedback

Changes are meant to protect both JHU and faculty interests

Changes are meant to enhance overall risk management, both regulatory and financial

Proposed changes agreed upon:

Classification of subrecipient vs. contractor

Revised risk assessment procedures and risk ratings for all subrecipients

Monitoring procedures for high-risk subrecipients

New risk assessment complete and posted on Financial Research Compliance website

New procedures are effective as of July 1, 20143

Subrecipient Taskforce Update

Classifying organizations as subrecipients presents additional compliance burden

Enhanced guidance on classification developed

Sub vs. contractor Quick Guide

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New Procedure 1: Contractor vs. Subrecipient Classification


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Subrecipient if the entity:

•Is engaged in substantive programmatic work•Participates in designing or conducting the work•Is granted some level of programmatic control•May seek to publish or co-author results•Provides cost sharing•Has key personnel

Contractor if the entity:

•Is providing services in support of the research program•Has not participated significantly in the design of the work•Is not directly responsible for project results•Provides goods and services in the normal operations and markets these to a variety of customers•Has little or no independent decision making in the design or conduct of the work being completed•Performs work that involves routine or repeated activities•Would not seek to publish or co-author results

Contractor vs. Subrecipient Detailed Guidance


OMB Uniform Guidance will require classification decisions to be documented

During proposal phase or as prospective subrecipients are identified, departments will complete the Subrecipient Determination Form

Form must be signed by Principal Investigator

Form will be submitted to the Office of Research Administration (ORA) with the Proposal

ORA must explicitly approve classification

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Subrecipients will now be classified as high or low risk

High-risk entities are defined as:

Foreign

Domestic subrecipients without formal compliance audit (A-133)

Entities with no prior JHU work history

Entities who received less than $1M in Federal funding in either of the last two years

The Office of Research Administration will be responsible for risk rating

A subrecipient committee has been established to consider changes to risk rating

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New Procedure 2: Subrecipient Risk Rating

A risk rating database of all JHU subrecipients has been established here: http://finance.jhu.edu/depts/frc/data_files_frc/subrecipientriskrating.xls

Risk ratings are consistent across JHU

Excerpt from the database:

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Subrecipient Number Subrecipient Name

Country Name

Risk Classification

Primary Division

Secondary Division Total Expense Non Federal

Total Federal

1009428SAVE THE CHILDREN USA Low 235 160 16,965,234.39

-

16,965,234.39

1016996JOHN SNOW INC USA High 235 None 7,942,550.72

-

7,942,550.72

1012576MALARIA CONSORTIUMUnited Kingdom High 160 None

6,510,395.75

-

6,510,395.75

1017654CITY YEAR INC USA High 125 115 3,441,219.00

268,369.00

3,172,850.00

1011133UNIVERSITY OF NORTH CAROLINA USA Low 160 170 3,115,319.47

262,398.30

2,852,921.17

1022268BLANTYRE HEALTH RESEARCH Malawi High 160 170 3,031,639.63

-

3,031,639.63

1013802UGANDA HEALTH MARKETING GROUP Uganda High 160 None

2,650,166.77

-

2,650,166.77

1011658WESTAT CORP USA High 160 170 2,325,331.23

-

2,325,331.23

2046718MAKERERE UNIVERSITY Uganda High 170 160 2,115,126.50

356,114.31

1,759,012.19

1005269ICDDR B Bangladesh High 160 170 2,068,572.00

1,744,479.00

324,093.00


Once a subrecipient classification has been approved by the Office of Research Administration (ORA), ORA will perform a risk rating

In doing so, Research Administration may do the following:

For current subs, consult the initial Subaward Risk Assessment Database

For new subs, require completion of the "Subrecipient Financial Information Questionnaire” including submission of recent A-133 reports

ORA will document and communicate the subrecipient's risk rating to FRC

Using the risk rating, ORA will negotiate specific terms and conditions into the agreement consistent with the revised post-award monitoring procedures

ORA will notify the department and Principal Investigator of the risk rating

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Changes to subrecipient risk rating will be considered by an Institutional Subrecipient Committee who will meet on a quarterly basis to discuss current subrecipient issues

Members of the Committee include:JHU FinanceInternal AuditChief Risk OfficerDivisional Research Administration and Business Office PersonnelDivisional Departmental Representation

A form will be developed for requests to change subrecipient risk ratings

The form must accompany copies of the most recent subrecipient A-133 report and the latest summary and detailed invoice reviews, and must be presented in person to the Subrecipient Committee

The Committee will base their decision on the information provided, taking into account:

Nature and size of subrecipientRecent work historyRecent A-133 Audit resultsResults of last summary and detailed invoice reviews

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New Procedure 2: Changes to Subrecipient Risk Rating

Enhanced Invoice Review Guidance

All invoices (high and low risk)Review for standard invoice elements as required by current policy (e.g., cumulative costs, certification etc.)

Review for financial accuracyExpense in line with budget category amounts Amounts aren’t round dollars solely based on a percentage of budget Previous expense + Current expense = Cumulative expense for each budget category Column totals equal the amount of individual column amounts in total Fringe cost are in line with salary expense for the agreed upon fringe rateFacilities and Administrative (F&A) costs are in line with applicable costs for the agreed upon F&A rate

Certification for Payment and Performance form required for all invoices

New Procedure 3: Enhanced Invoice Review Guidance

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Review for Standard Invoice Elements

1. Name of the subrecipient2. JHU purchase order number3. Date of the invoice4. Invoice number and project

title5. Period of performance covered

by the invoice6. Breakdown of costs in

accordance with expenditure categories

7. Current period costs and cumulative project costs

8. Cost sharing (if applicable)9. Program income (if generated)10.Contact person for invoice

questions11.Certification as to the truth and

accuracy of the invoice

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4

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Review for Financial Accuracy

No round dollars

Recalculate totals

Recalculate fringe

Recalculate F&A

Review period of

performance


Previous + Current =

Cumulative

Matching expenditur

e categories

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Certification for Payment and Performance must be completed for all invoices

Approval by both Financial Analyst and Principal Investigator is required

Form must be included with invoice in order to process payment in SAP

Form is located on JHU Finance website. Here is the link: https://apps.finance.jhu.edu/policy_procedures/policy/sub/cert_pymt_perf.docx


High-risk subrecipients will be required to submit general ledger summary and detailed financial reports along with all invoices

Departmental personnel will be responsible for completing a summary comparison of the invoice to the financial reports

Every six months, departmental personnel will complete a more detailed review of a subrecipient financial report supporting one invoice, including obtaining supporting documentation for a selection of charges

The Certification for Payment and Performance form has been revised to evidence these reviews

Problems identified with billings must be resolved and the resolution documented

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New Procedure 4: Additional Monitoring for High-Risk Subrecipients

Invoice Summary Review (every invoice)

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eUM Financial SystemProject 10011338Start Date 11/1/2013End Date 12/31/2013

G/L Account Posting Date contractor Description PaymentSalary & Wages 11/15/2013 Jacque Ravel Pay Period 11/1 - 11/15 2775.37

11/30/2013 Jacque RavelPay Period 11/16 - 11/30 2775.36

12/15/2013 Jacque Ravel Pay Period 12/1 - 12/15 2775.37


Total Salary & Wages11101.4

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Employee Benefits11/15/2013 NA Employee Benefits 933.8511/30/2013 NA Employee Benefits 933.8412/15/2013 NA Employee Benefits 933.8512/31/2013 NA Employee Benefits 933.84

Total Employee Benefits 3735.38

Professional Services 0Total Professional Servicies 0

Travel 0Total Travel 0

Equipment 0Total Equipment 0

Supplies11/13/2013Fedex Postage 43.711/21/2013Carolina Plastic Pippets 535

12/5/2013Carolina Glass Screw-Cap Vials 526.2512/7/2013Thermo Scientific Phusion RT PCR Kits 1545

12/13/2013GraingerChemical Buffer Solution 155.8

12/17/2013Airgas Oxygen 20 CU FT 1069.44Total Supplies 3875.19

Other Direct Cost

11/13/2013Fisher ScientificStandard Mini-Centrifuge 1445.15

Total Other Direct Cost 1445.15

Indirect Cost11/30/2013 Indirect Cost 4721.1712/31/2013 Indirect Cost 5357.48

Total Indirect Cost10078.6

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Total Costs - 1001133830235.8

3

Ensure totals match

New Procedure 4: Additional Monitoring for High-Risk Subrecipients


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Form must be uploaded with invoice and subrecipient ledger in order to process payment in SAP

If high-risk subrecipient:

A summary review is required to be performed and must be documented on the Certification for Payment and Performance

Date of last detailed review must also be documented

Step 1: Invoice Detailed Review (every six months)

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Other Direct Cost





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Total Costs - 1001133830235.8

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Ensure totals match

New Procedure 4: Additional Monitoring for High-Risk

Subrecipients


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Other Direct Cost





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Total Costs - 1001133830235.8

3

Review all transactions for

allowability against subaward

agreement and relevant OMB

Circular


Subrecipients


Ensure all amounts agree between ledger and invoices 20







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Other Direct Cost





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Total Costs - 1001133830235.8

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Sample transactions from ledger and obtain supporting documentation

from subrecipient

Jacque RivalAppointment LetterLabor DistributionEffort reporting (if

available)Timesheets (if

applicable)

Fedex Invoice

Airgas Invoice


Subrecipients

How to handle discrepancies identified during invoice reviews:

Must be resolved prior to payment

Partial payments of invoices are allowable (e.g., withholding questioned costs)

Significant discrepancies may indicate the need for a 100% desk audit of the specific invoice or all invoices depending on the nature of the concern

Resolutions must be formally documented on the invoice or payment certification form

At discretion of departments, results may dictate future invoicing requirements (e.g., submission of timesheets with every invoice) 21


Subrecipients

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This should not be completed until all questions about costs have been resolved

If high-risk subrecipient:Document the summary reviewDocument that the detailed review has taken place on the Certification for Payment and Performance including the date performed

Upload all support into SAP


Subrecipients

JHU has a different subrecipient risk-profile than our peers

JHU is required to advise subrecipients of their responsibilities under federal regulations and then to monitor to ensure they are being met

Subrecipients’ issues could have a significant financial impact on JHU and the reputations of its faculty members

New procedures around subrecipient classification, risk rating, and invoice review will go into effect on July 1, 2014

More documentation will be required to validate expenditures from high-risk subrecipients

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Conclusion

ResourcesThis page contains links to the various resources mentioned throughout this presentation. You can click on the links or copy and paste the links into your web browser.

contractor Vs. Subrecipient Guide:

JHU Subrecipient Policies and Procedureshttp://finance.jhu.edu/policyapp/displayGuideContents.do?guideId=SUB

JHU Subrecipients Risk Rating Database:http://finance.jhu.edu/depts/frc/data_files_frc/subrecipientriskrating.xls

slide 1 revised subrecipient monitoring policies and procedures

Documents

procedures slide

classification of subrecipient

subrecipient committee

subrecipients of requirements

prospective subrecipients

risk assessment procedures

classification decisions

coauthor results contractor