The federal regulations that describe subrecipient monitoring are general, but contain the following core elements of compliance:

• Advising subrecipients of all applicable federal laws and regulations, and all appropriate flow-down provisions from the prime agreement
• The routine receipt and review of Technical Performance Reports
• The routine Review of Expenses-to-Budget
• The periodic performance of On-site Visits, or regular contact, if necessary
• The option to perform " audits" if necessary
• Review of A-133 audit reports filed by subrecipients and any audit findings
• Review of corrective actions cited by subrecipients in response to their audit findings
• Consideration of sanctions on subrecipients in cases of continued inability or unwillingness to have required audits or to correct non-compliant actions

The above list is not exhaustive of all compliance requirements. In addition to the general elements of compliance noted above, there may be additional sponsor- or program-specific requirements that mandate collecting and documenting other assurances (e.g. on lab animals, human subjects, biohazards, etc.) during the course of a project.

Department-level Subrecipient Monitoring Procedures

Department grant administrators, with guidance or assistance from OSR staff, should annually consider the following subrecipient monitoring procedures when appropriate:

	Review of Technical Performance Reports should be done on a timely basis by the PI. Any unusual or unforeseen items should be investigated and documentation thereof should be retained in the department’s files for ready access by regulators. In some cases, subaward terms may require specified deliverables in addition to, or in lieu of, technical reports.
	Review of Invoices and Expenses-to-Budget should be done for cost-reimbursement subawards. The subrecipient’s invoices showing both current period and cumulative expenses-to-budget are generally required. Department grant administrators should compare subrecipient’s invoices to established subaward budgets. Evidence of the regular review of invoices by both the PI and the department grant administrator should be in place and retained on file. "Evidence" can be in the form of PI initials or authorizing signature on invoices, e-mail communications, notes of meetings with the department grant administrator, etc.
	Clarification of Invoiced Charges should be requested by department grant administrators for explanations of any unusual, miscellaneous, apparently excessive or other charges invoiced by the subrecipient. If the explanations are not sufficient to render a prudent judgment on the allowability of the cost, and the terms of the subaward permit, department grant administrators may request detailed justifications from subrecipient. Department grant administrators may also periodically request, if the terms of the subcontract permit, particularly from high-risk subrecipient detailed support for selected invoiced charges to verify their appropriateness and reasonableness. Examples of detailed justifications that may be requested from subrecipients include:
		Payroll records/data
		Copies of paid invoices showing the cost of items purchased and Vendor Justification Forms if required by Federal contract
		Descriptions of services rendered by consultants including hourly rates and time reports
		Details of incurred travel charges, stating the purpose, airfare, meals, ground transportation, unallowable costs, etc.
		Costs determined to be unallowable or unreasonable should be disallowed
		In circumstances where questionable costs remain unresolved, particularly when subcontract terms do not permit requesting supporting documentation, it may become necessary to conduct a definitive audit of all or a portion of questionable costs (See Audits below). In these cases, department grant administrators may contact the Office for Sponsored Research for coordination of subsequent actions with the appropriate school sponsored research office.
	On-site Visits are a discretionary monitoring procedure. On-site visits conducted by the PI to evaluate both compliance with the scientific objectives of the project and the appropriateness of the subrecipient’s administrative systems, processes, and charges should be documented via correspondence, meeting notes, trip reports, etc. and retained on file.
	Audits - discretionary audits of a subrecipient is an acceptable monitoring procedure under federal regulations, and all of the University's cost-reimbursement subaward agreements contain "right-to-audit" clauses. Formal audits are performed infrequently, however, and departments should contact Stanford's Internal Audit Department before initiating discretionary audits.
		Review A-133 audit reports –administrative staff should review A-133 reports filed by subawards that expend $500,000 or more of federal funds during the fiscal year and are subject to A-133. Staff may view the subrecipient’s A-133 report in the Federal Audit Clearinghouse (FAC) database (http://harvester.census.gov/sac). This web site provides evidence to verify that the subrecipient has completed an A-133 audit and to assess the presence of audit findings. This FAC verification would be done in lieu of reviewing A-133 reports submitted by the subrecipient to Stanford.
		When subawards have A-133 audit findings – OSR may consider issuing a management decision on audit findings, when appropriate, and evaluate subrecipient corrective actions cited in response to audit findings. Corrective actions cited by the subrecipient should be verified to ensure subrecipient compliance and may necessitate on-site monitoring. OSR may also consider whether subrecipient audit findings necessitate adjustment of their own records.
		Subawards not subject to A-133, including foreign and for-profit entities – Because A-133 does not apply to foreign or for-profit subawards, Stanford may establish its own requirements, as necessary, to ensure compliance by such subawards. Contracts with foreign or for-profit subawards should describe applicable compliance requirements and responsibilities. Methods to assess compliance with federal subawards made to foreign or for-profit subawards may include pre-award audits, on-site or audits.

Additional links:

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• Who to contact in OSR