TRANSCRIPT
U.S. Department of Education Webinar
Recovery Act Technical Assistance Web Conference Series
Subrecipient Monitoring
August 25, 2010
David Downey: Hello everybody. This is David Downey and welcome to the U.S. Department of Education's Recovery Act Technical Assistance Web Conference. Glad to have you with us today. Today's session focuses on the very important topic of "Subrecipient Monitoring." Presenting with me today is my colleague from the Department's Risk Management Service, Dan Christiansen. And joining us by telephone we are pleased to have Charlotte Stevens, Director of the Division of Education Finance at the Louisiana Department of Education and Jennifer Morgan, the Title I and Title II Senior Consultant for the Colorado Department of Ed. Welcome to you both.
Now, in addition to these good folks, we are joined by a distinguished panel of individuals who will be helping us answer questions during the Q&A portion today and we are so glad for their time as well. Now along with your questions that we are going to be asking for, ladies and gentlemen, your feedback is equally important. We want to encourage you to complete an evaluation following today's webcast and tell us just what you think and maybe how we can do a little bit better job in the future for you. Now, the link to the evaluation maybe found through our website ed.gov in the Recovery Act Web Conference section.
Now, with that said, let's do just a little bit of housekeeping if we could, and little bit of our sound check. Now, before we get into today's topic, we want to make sure that everyone can fully participate in this conversation. To that end, we encourage you to submit your questions early and often. Take a moment to locate the "Ask a Question" box on your webinar screen. Whenever a question comes to mind, just type it in the box and hit the button labeled "Submit Question." This will place your question in the queue to be answered during the Q&A segment. You don't need to wait to receive a response from us before you send another question. Just keep sending those questions in as they come to mind.
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Let's begin with an overview of our agenda. During our 90 minutes today together, it's our goal that you will leave this webinar with the ideas and tools you need to improve both the effectiveness and the efficiency of your monitoring activities. As you can see with our agenda, we will first define or maybe better put, rather explain what activities encompass monitoring subrecipients as well as the regulatory background outliningthe grantees responsibilities and requirements. From here, we'll turn our attention to discussing the best practices that you can incorporate into your own monitoring plans. I think that you will find that the best practices identified in this program are ones you could utilize regardless of the number of subrecipients who are charged with monitoring. They also take into account the need to maximize the financial resources that your organization allocates for the monitoring activities as well. We understand that that's very important to you.
We will also highlight additional monitoring requirements under the Recovery Act, including some preliminary Recovery Act related findings made by the Department's Office of Inspector General and the GAO, that's the U.S. Government Accountability Office. We will also touch upon a few things the states are doing to oversee this new source of funding. Now representing our colleagues among the State Education Agencies or SEAs, Charlotte Stevens will tell us about the Louisiana's use of a financial risk assessment to identify school districts that present higher levels of financial risk and Jennifer Morgan will be discussing Colorado's use of a web-based system to monitor their subrecipients and track progress on corrective actions.
Now, with that said, let's go in and talk just a little bit about our monitoring. We want to talk in generalized terms about this topic and the critical importance of this administrative function. Just as all the Federal awarding agencies, like the Department of Education, are required to monitor their grantees, so too are the grantees required to monitor their subrecipients. Together, we are ensuring that these dollars, the people's dollars, your tax dollars, my tax dollars are used with the stated purpose of their respective programs and at accordance with all of the applicable Federal and State regulations, rules and guidelines.
With the passing of the American Recovery and Reinvestment Act, subrecipient monitoring has come under even greater scrutiny and for good reason. Already the vast majority of the funding the Department disseminates is through its formula grant programs, where the dollars are passed through the states to the appropriate entities. Now, the Recovery Act, sometimes referred to by the acronym of ARRA, has made almost $100 billion in additional funds to our country for educational purposes. While increased funding can grow and improve the educational opportunities of all of our nation’s students, it also heightens the awareness and need for proper stewardship and greater accountability of the people's money throughout the life of the award. And that's a phrase I want to really emphasize here when I say that it's not just a catchphrase. It is the people's money, and we take that very seriously here and I know you do as well. We want to make sure that we get the biggest bang for the buck as it were. And I know you are going to join us in that effort.
The challenge then is for all of us to ensure that we are doing everything we can to maintain or better yet improve the level of oversight of Federal programs in this historic and truly unprecedented era of increased financial investment. Therefore our monitoring plans must be comprehensive in approach. Now I don't have to tell any of the experienced staff participating in this session that monitoring is so much more than conducting the site visits, however helpful those experiences are for all parties. And to those new staff or new subrecipientslistening, you should understand that every interaction with the awarding or administering agency is a monitoring opportunity.
Above all, we must view monitoring like an ongoing conversation between the grantee and the subrecipient. Such a continuous dialog enables the grantee to determine if any areas of non-compliance or shortcomings and programmatic performance exist and how to address them. Conversely, this regular contact also enables the grantee to see where and how the subrecipients are doing a good job and possibly producing results that other organizations could very well replicate. Don't ever view monitoring as just a series of separate distinct events. Your monitoring plan should encompass all actions taken throughout the life of a grant award. From drafting the grant agreement during the award review, attending project director meetings and conferences, reviewing the annual reports and communicating with the grantees through general correspondence, emails, telephone calls, certainly those all-too-important, but at times all-too-infrequent, site visits and of course the following up actions taken to address any audit findings. All of that is monitoring.
Now if we were to continue comparing monitoring to an open and frank discussion between the parties, we have to remember communication is a two-way street. Part of good monitoring is also, in my view, modeling correct protocol and procedure. An example of that is always signing the regulation or rule that supports the conclusion. With that said, let's look at regulations governing the grantees’ responsibility to monitor subrecipients.
Now as you can see, an OMB Circular A-133 clearly mandates that all recipients must monitor their recipients' use of Federal dollars. A pass-through entity shall monitor the activities of subrecipients as necessary to ensure that the Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and the performance goals are achieved in compliance and getting the job done, that's what we are saying folks. Now the Office of Management and Budget A-133 Circular sets forth auditing standards for Federal audits under the Single Audit Act, which provides the most straight forward description of a grantee's monitoring duties.
Now here we will move on to the next slide. We can find a comparable or supporting language of the OMB Circular A-133 and 34 CFR Parts 74.51 and Part 80.40. These sections are included in as part of the Education Department General Administrative Regulations affectionately referred to in these parts as EDGAR. Now Part 74 applies to institutions of higher education, hospitals and non-profits, while Part 80 applies to state, local and Indian tribal government. Both sections, though, require grantees to monitor the day-to-day operations of subawardees and subrecipients.
It should be noted, of course, that neither citations are specific examples of what constitutes monitoring included. The Federal Single Audit Act however does provide us with a little bit more detail and let's look at that now. Now, this piece of legislation does specifically mention site visits and limited scope audits or through the broad-and-far-reaching phrase of other means, kind of a catch-all phrase. Now as methods to monitor your subrecipients, it also specifically requires subrecipients to make records and financial statements available to auditors.
Now, moving on, even more detailed guidance can be found in Section M of the OMB A-133 Compliance Supplement. It states that pass-through entities are responsible for monitoring subrecipients during the award and provides for a few examples. These methods include the review of the subrecipients’ financial and performance reports, again performing those site visits to review programmatic and financial records and to observe operations. Now, having regular contact with the subrecipient whether it be, again, through the telephone conversations, email or as we've seen in several states, instant messaging and again by any other means appropriate or necessary. The compliance supplement also provides auditors with a standard in evaluating the effectiveness of a grantee's monitoring efforts, reasonable assurance standard. Now, monitoring efforts must provide a reasonable assurance that a subrecipient administers Federal funds in compliance with laws and regulations and that performance goals are achieved. They go hand in hand, and a little bit of a cliché, but something I've shared with grantees over the years in speaking to folks like yourselves, compliance and technical assistance they are one in the same. The greatest level of technical assistance or customer services that I can provide you or that we at the Department of Education can provide is to ensure that you are in compliance with all of those rules and regs.
Now, moving on a little bit more with the compliance supplement, the compliance supplement was updated shortly after passage of the Recovery Act and several additional Recovery Act-related monitoring requirements were added that you really need to know about. Now these additional provisions require grantees to inform first-tier subrecipients to register in the Central Contractor Registry and to obtain a DUNS number, that's a DUN and Bradstreet Data Universal Numbering System. Now, grantees must also ensure that this information is current through random checks. Additionally, the compliance supplement advises auditors to test whether a grantee checks to make sure a subrecipient is currently registered in the CCR before making a subaward. Now, for any subrecipients out there that might have some questions about how to go through this process, one place to find step-by-step procedures on the Central Contractor Registry is the website at grants.gov. They have a wonderful, again, step-by-step process of how you can register with that. So I'd encourage you, if that's something you need, to visit grants.gov a little bit later on in the day or perhaps little bit later on in the week.
Now some additional requirements that we want you to be mindful of. Grantees should also carefully review the program statute to determine whether there are any additional program-specific monitoring requirements. In other words, read the fine print. Please review the award agreements which may contain additional monitoring assurances the grantee must sign before receiving an award, the assurances you may have to sign to meet program specific statutes or general assurances contained in the General Education Provisions Act also known as GEPA. The assurances in GEPA include a promise to monitor subrecipients, provide any necessary technical assistance, and of course correct any deficiencies identified through your monitoring activities.
Now, with that said, this covers virtually all the Federal laws and regulations concerning subrecipient monitoring that apply across the Department's programs. There are a couple of questions at this point that we would ask that you ask yourself. First, why do you have to monitor subrecipients? Well, very honestly, it's the law. But more than just that, monitoring helps ensure that our tax dollars are being utilized to the fullest to meet this nation's needs within the framework of all of the applicable rules, regulations and guidance. Yes, it's the law, it's also kind of really, without sounding too cliché, your civic duty.
Now, the second question is how do grantees have to monitor? And the answer to that is how the grantee chooses. As you can see from the outlining of these regulations, Federal law regulations are extremely flexible, allowing grantees a wide berth in carrying out their monitoring duties as they see fit.
Now, this brings us to our third question on the slide. How should you monitor, or, what does good monitoring look like? Well, Federal regulations mention several methods of monitoring, but no one method is required. So long as there is a reasonable assurance that standard again, the compliance and performance requirements are met. And as we continue this presentation, understand that the Department of Education is fully aware that what works for one grantee may not necessarily work for another. We'll discuss several best practices of subrecipient monitoring, but keep in mind these are suggestions and recommendations, but not Department requirements. It's kind of a pick and choose what is going to fit best for your needs and adopt those because I think you are going to hear some very useful things in the coming minutes.
Now, let's turn things over to Dan, who will tell us about some of these best practices for monitoring subrecipients. And again, you may want to incorporate them into your own programs.
Dan Christiansen: Alright. Thank you, David. As David said, this brings us to the second part of today's webinar, "Best Practices in Subrecipient Monitoring." Now, monitoring occurs throughout the life cycle of a grant award and contains many different components. We will touch on a few today beginning with the monitoring plan. Next, we will discuss using a risk-based monitoring approach to determine when and how you monitor your subrecipients. Finally, we will discuss monitoring challenges presented by the Recovery Act and discuss a few methods states are using to address these challenges.
The first best practice, reviewing and revising your monitoring plan, serves as an appropriate starting point to today's discussion. You may have received audit findings related to subrecipient monitoring. Even if you haven't, the Department strongly encourages all grantees to periodically review their monitoring policies and procedures. This is especially important for programs receiving Recovery Act funding.
Now, your monitoring plan should be in writing, widely disseminated and understood throughout your organization and available to auditors and Federal program officials. Like many grantees have already done, it's a good practice to post your monitoring plan on your website to provide access to staff, subrecipients and auditors.
Grantees should ensure that monitoring plans are comprehensive, meaning the plan should document all of your monitoring activities from pre-award activities to closeout and everything in between. Among other things, your plan should include the methods you use to monitor subrecipients. This will include phone conversations, self assessments, desk reviews and onsite visits. It should also include a monitoring schedule for the year, which could be based on a multi-year strategy. Your plan should also contain a monitoring checklist, which specifies all requirements that the subrecipient must meet. Using a risk-based approach, your monitoring plan will include the factors you weigh to determine when you will monitor subrecipients and what monitoring methods to use. This can be done by performing a risk assessment, which we will discuss later on in the webinar.