Risk analysis when evaluating proposals as a Pass-Through Entity
Risk analysis when evaluating proposals as a PTE
Let's start by defining PTE. A PTE is an entity that receives federal funds directly from the federal government and passes the funds to a subrecipient. The PTE must carry out a risk analysis of the possible subrecipients since the subrecipient must meet all the goals established by the federal grant.
As a Pass-Through Entity (PTE) one may ask, how will I choose my subrecipients? or how do can I make sure my subrecipients comply with federal regulations? These are very common questions for PTE’s, after all, if one of your subs do not comply, the responsibility falls on you. Therefore, performing a risk analysis on your subrecipients when evaluating proposals is so important as a PTE. A PTE can ensure a smoother process once the Award and Monitoring phases come up since you have already filtered out possible noncompliant subrecipients, and ensured the best possible suiters to carry out your program.
A subrecipient is an entity that receives federal funds through another non-federal entity (PTE). Sub-recipients can be considered a risk since if there is non-compliance, the responsibility lies with the PTE and not the subrecipient.
Pass-through entities must evaluate their subrecipient's risk of noncompliance with applicable Federal statutes, regulations, and the Federal award's terms and conditions. The central purpose of the risk assessment is to determine the appropriate level of monitoring of Federally funded project activities to ensure the subaward objectives and purpose are met; that the subrecipient is in compliance with all applicable Federal requirements; and that the performance goals of the subaward are achieved.
This process is required in the 2 cfr 200.331 or OMB Circular, the federal regulation that applies to all federal funds. which states:
“pass-through entities evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in § 200.331(d-e). In evaluating such risk, pass-through entities may consider such factors as:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements, and the extent to which the same or similar subaward has been audited as a major program;
(3) Whether the subrecipient has new personnel or new or changed systems; and
(4) The extent and results of Federal awarding agency monitoring (e.g. if the subrecipient also receives Federal awards directly from a Federal awarding agency).”
Although it does not specify that it should be done before the award is given, it is highly recommended that is completed during the pre award phase to avoid non compliance within your possible subrecipients.
What should you look for during the risk analysis? There are five basic things that should be taken into consideration for this:
Financial stability
Quality of management systems and ability to meet the management standards prescribed in 2 CFR 200
History of performance
Reports and findings from audits performed under Subpart F - Audit Requirements of this part or the reports and findings of any other available audits; and
The applicant's ability to effectively implement statutory, regulatory, or other requirements imposed on non-Federal entities.
We can help you in this process. Contact us for more information at 787-766-6100.
