Authored by Jason Guilbeaul
Director of Post Award Services
How many systems and resources do you use when you are performing tasks relating to subawards? Do you notice a disconnect? The tasks that Pass-Through Entities (PTEs) must perform for the various compliance requirements can be frustrating; from risk assessments, invoicing and payments, subrecipient monitoring, all the way through to close out. There are many fragmented processes, involving various individuals and offices, making managing subrecipients an area where efficiencies may be hard to come by, which can result in it being a high-risk compliance area during an audit. In a consumer world where one-stop-shopping is embraced by many and you’re able to walk into one store to buy clothes, home improvement items, workout equipment, groceries, get fast food (because we all know you don’t feel like cooking after buying groceries), and see an eye doctor, shouldn’t we follow suit and make our professional lives as efficient? We should strive for a place, or create one, where we can do most, if not all, of the various tasks required of us as PTEs. In this article, I’ll describe my vision for what I call “The SubCommons,” (similar to eRA Commons), in hopes that many will build from these ideas, and maybe someday PTEs will get our one-stop-shop.
For me the ideal subrecipient system would combine the capabilities of systems like eRA Commons, Payment Management System, Sam.gov, supplier portals, Grants.gov, pre-award systems, FDP Expanded Clearinghouse, and the Federal Audit Clearinghouse. Combining the capabilities and data elements from these separate systems into one would automate and streamline almost the entire process. An institutional profile would be created to house preferences and store data or be linked with the data from the above-listed systems and sites. I’ve broken out the functionality between Pre- and Post-Award, but note that these responsibilities may reside in different areas at your institution.
- The ability for PTEs to post solicitations for prospective subrecipients to bid on. Likewise, potential subrecipients can submit bids/proposals through the system to the PTE. Even if there is no competition, PTEs can have their subs submit proposals through the application (the data will be stored in the system and used in other functionalities downstream).
- Ability to issue and execute subawards and amendments, submit prior approval requests, and transfer a subaward to a new institution (again, allowing certain data elements to be stored in the system to help downstream).
- Automated risk assessment with preference settings personalized to institutional policies. This could automatically categorize a subrecipient low risk (no human intervention needed) or higher risk (requires human intervention). Pulling the structured data from the Federal Audit Clearinghouse (FAC) will help automatic this process. Audit findings are reported at the Compliance Requirement level, specific CFDA numbers, and by cluster. I could use the filter options within the FAC to set my preferences based on what my Institution considers low and high risk. As one example, if I search for a subrecipient without findings in the Allowable Activities and Allowable Costs/Cost Principles compliance requirement, I could then set a preference to label results from this filter as low risk. Then the system will automatically perform the risk assessment for me, without me having to review the Single Audit Report. If a subrecipient has findings in the selected criteria then the risk assessment requires human review. The system would compare CFDA number findings with the CFDA of your subaward and recognize that your subrecipient had a finding pertaining to that CFDA number. When the system located a finding related to your subaward (again, it can do this validation if the data from the subaward is stored in the system) it could also prompt the issuance of a Management Decision (see 2 CFR 200.521c).
- Subs without a single audit can set up their own profile, answer questions about controls and policies, and upload various associated documents for PTEs to assess their risk.
- SEFAs contain CFDAs and Clusters relating to grants your institution has had (also stored in FAC), and you can use this stored data and verify if a potential sub has experience with a certain program to assess risk. The system would alert you if it sees a sub with no experience with a particular CFDA or cluster.
- The system would flag the subrecipient if they are not registered in SAM. An automated message would be sent to the subrecipient with instructions on registration.
- How many PTEs out there ask you to email them an invoice, but also log into a Supplier Portal (like the Ariba Network) to submit the invoice again? The system would provide subs the ability to submit invoices to the PTEs, either manual entry or upload. Similar to the Payment Management System, you could upload a file and invoice all of your PTEs simultaneously. The system routes the invoices to each respective PTE (using the Financial Contact listed in the subaward agreement from the FDP template). Invoices for cost-reimbursable subawards would be entered or uploaded at the commonly used categories (e.g. salaries, fringe, travel, supplies, etc.). If PTEs required any attachments, the subs could attach the appropriate backup (e.g. transaction details) for those specific subawards after they’ve done the initial upload of data.
- Specific invoicing modules could be developed to accommodate specific grant invoicing. Not every invoice follows a standard cost-reimbursable invoice template, so over time functionality could be added to accommodate different types of invoicing. If nothing else, institutions could upload PDFs in any invoicing format, and hard-enter a dollar amount for reimbursement in an “Amount” field.
- The invoices would auto-route to the appropriate person/group at the PTE for an administrative/financial review of the invoice. PTEs would have the option to allow the system to automatically check the invoice for compliance or do a manual review. The auto-review could be accomplished by having the system compare the expenses to the budget, where you could set rebudgeting tolerances or unallowable categories. This information is pulled from the subaward document and/or proposal. Since the obligated amount is in the system from the Pre-Award documents, the system could tell if the sub was invoicing more than the obligated amount and alert the subrecipient as they’re trying to invoice (Payment Management System does this, too). This would be very helpful for subs whose PTEs don’t flow down automatic carryforward. I’ve seen situations where a sub has overlooked the carryover restriction and never reduced the amount of the award in their financial system at the end of a budget period, which caused them to overspend.
- PTEs that don’t flow down automatic carryforward can complete actions within the system to approve/deny carryforward requests. Denied carryforward requests would deduct from the obligated amount. This information gives the PTE the amount to deobligate. On the other side, the sub would mark their final invoice, via checkbox, for each budget period as “final for budget period” and any un-invoiced amounts would be the basis of a deobligation expected in an amendment from the PTE.
- The system will be customizable for workflow purposes. One entity may want the invoice to route to the PI after the Financial Contact from the subaward agreement approves it, while another may want it to route to the Accounts Payable Office for payment. In any case, approvers in the workflow would get notified if an invoice is in their queue for too long. Note that per 2 CFR 200.305, PTEs have 30 days to pay an invoice (unless they believe it to be non-compliant) so reminders would be helpful.
- Given the variety of financial systems and payment routing at various institutions, it is unlikely the system would be fully integrated, it may only serve as the approval routing for the invoice. The system would be flexible for institutions to set up their own workflow. After the appropriate approvals occur, the invoice could get routed to your Accounts Payable office, and they could follow their normal procedures for reimbursement. Like many systems with electronic routing, which prevents paper from getting lost, a subrecipient system could have similar functionality.
- If your institution assigns Purchase Order (PO) numbers to subawards in the procurement system, there will be an added step when the subaward is executed, and subsequently gets assigned a PO number in the financial system. The PO number will be manually entered as an attribute to the subaward.
- The system could give entities the option to send electronic payments to institutions using either the data in SAM.gov (with SAM integration), or from the data the PTE enters in the system.
- With the system connected to the Federal Audit Clearinghouse, it will calculate the 9-months due date for the annual Single Audit, and notify PTEs if they have subs that are delinquent. If a new Single Audit is submitted, the system can redo the automated risk assessment steps.
Federal Funding Accountability and Transparency Act (FFATA) Reporting:
All the data elements to complete FFATA reporting will be in the system based on the information outlined above. Ideally, data could be pushed from the system into FSRS.gov, and you would only have to log into the SubCommons to report. Better yet, if the federal government were responsible for this system, we wouldn’t need to do FFATA reporting at all! They would already have access to the information. I think a strong argument could be made to consolidate the Federal Audit Clearinghouse into the group as well. We already must update our SAM.gov profile annually, so why not upload Single Audits there as well?
How do we get there?
This is where you come into play. While it would be difficult to create a one-size-fits-all solution given the variety of institutions, and grants with varying compliance requirements, I think there is ample room to maximize efficiency. Let’s take these ideas and use what we can to improve current systems and processes. I hope this article sparks discussion, thoughts, ideas, and more innovations. Think about the amount of burden that could be reduced and the increased compliance; this idea is worth exploring. I encourage everyone to step back, analyze and rethink your current subrecipient processes. When you find yourself thinking, “this would be so much easier if we had…” use that momentum to find ways to bring those thoughts to reality. We are in this together, let’s use our togetherness for solutions!
Author Note: Special thank you to Jessica McDonough, CRA (Subaward Coordinator, Dartmouth College) for her review and suggestions on this article, and shared enthusiasm on this topic.#Catalyst#August2019#insights