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1307 PR.02 Managing Subrecipient Activity Associated with Sponsored Programs
May 4, 2018
This procedure outlines the process for the proper management of subrecipient activity under a prime award to Yale and supports Policy 1307 Subrecipient – Establishing, Managing, and Monitoring. All faculty and staff involved in the conduct and/or oversight of sponsored research involving a subrecipient are expected to follow the procedures outlined in this document.
Reason for the Procedure
Yale has the responsibility for ensuring that all research carried out by a subrecipient is conducted and administered in compliance with federal regulations as well as sponsor and Yale requirements. This procedure defines general roles and responsibilities of the affected individuals and describes the activities that should be undertaken when managing subrecipient activity.
2 CFR Part 200 requires Yale to pay subrecipient invoices issued under a federal prime award within 30 calendar days after receipt of the invoice, unless the invoice is believed to be improper. In order to ensure compliance, invoices should be processed as described below.
A. Subrecipient Invoice Receipt
The subaward agreement instructs the subrecipient to send their invoices to email@example.com. Yale Shared Services (“YSS”) processes invoices daily within the Accounts Payable (“AP”) system and loads them nightly to the DBO’s Workday inbox in order to begin the payment process. The invoice is routed to the appropriate individual(s) based on the configured approval process in Workday.
B. PI Review and Approval of Subrecipient Invoices
The PI, or delegated individual, is required to approve each invoice, in a timely manner, acknowledging the review of technical progress reports and/or satisfactory performance by the subrecipient, as appropriate. The approval of the PI or delegate signifies the invoice was reviewed for reasonableness, that all costs appear appropriate, are consistent with relevant terms and conditions of the award, and the subrecipient is making adequate progress toward the aims of the subaward.
The delegation to a qualified individual to approve invoices on behalf of the PI must be documented and maintained within the award file by the DBO. DBOs can use Form 1310 FR.06 Delegation of Approval Authority for Sponsored Projects. The PI’s or delegate’s approval of the invoice may be obtained by one of the following methods: 1) signature (pen and ink); 2) electronic approval; or 3) email approval. The approved invoice must be attached to the Workday business process. If approval is retained via email, the DBO is responsible for including the following language in the body of the email to the PI or delegate. The final approval email must be attached to the invoice submitted in Workday.
Email approvals must adhere to the following format.
Subject: PI Approval Request– (Subrecipient Name– Invoice Number) (Agency Org– Subaward number 00- 000)
Attn: (Insert PI or Delegate Full Name):
The attached invoice received for the above Subject Subaward number requires your review and approval for payment.
Your payment authorization will serve as verification of the following:
- Invoice expenditure categories are reasonable and allowable;
- Expenditure categories fall within the subaward budget, rebudgeting authorization, prior approval requests, and statement of work;
- Required deliverables were received (e.g., progress reports, equipment, technical reports, etc.); and
- Progress to date is satisfactory.
Please reply to this email in the standard format and type “Approve” or “Disapprove” within the body of your email. If disapproved, please indicate why you are disapproving the invoice.
C. Department Review and Approval of Subrecipient Invoices
Once the PI or delegate approves the invoice, the Cost Center AP Invoice Specialist verifies the charging instructions are accurate and uploads and submits the invoice and other supporting documentation in Workday. The invoice is routed through the configured approval process in Workday.
DBOs are responsible for reviewing and approving subrecipient invoices for adherence to the budget and the terms and conditions of the related subaward. The DBO’s approval in Workday also signifies that the PI or delegate approved the invoice, as described above, and is appropriate.
The DBO reviews subaward invoices to ensure they are accurate, in accordance with the requirements of the subaward, and include the following information:
- subrecipient name;
- date of invoice;
- supplier contract number;
- subaward amount (prevailing authorized amount);
- invoice number or reference;
- period of performance covered by the fully-executed agreement;
- period of performance covered by invoice;
- expenditures by major category (e.g., salaries, benefits, supplies, equipment, F&A, etc.);
- current period costs or clinical services rendered in a specified period, including cost sharing (in sufficient detail to enable comparison to project budget), and cumulative project costs or clinical services rendered, including cost sharing, as compared to the project budget;
- subrecipient contact person with respect to the invoice, if indicated; and
- certification on each invoice as to the truth and accuracy of the invoice.
The DBO’s electronic approval in the Workday business process indicates that the DBO review has taken place.
D. Revision of Previously Approved Invoice Not Yet Paid
If the DBO receives a revised invoice from a subrecipient for an invoice previously approved by the PI but not yet paid, the DBO should “Send Back” to AP the active invoice in their Workday inbox, requesting AP to cancel it. The DBO should then process the revised invoice for payment by sending it to firstname.lastname@example.org. Once the revised invoice is received back in the DBO’s Workday inbox, the DBO may approve the revised invoice and resubmit for payment in Workday without additional approval from the PI if the revision is $200 or less. The first invoice with PI approval should be attached to the revised invoice record.
E. Resolving Invoice Content Issues
2 CFR Part 200 requires Yale to pay subrecipient invoices issued under a federal prime award within 30 calendar days after receipt of the invoice, unless the invoice is believed to be improper. If during the invoice review process the PI, delegate, or DBO identify a concern, they should request clarification from the subrecipient’s PI and/or request a revised invoice. Specific concerns and actions taken by the DBO and/or the PI or delegate to ascertain the accuracy and reasonableness of the invoice must be recorded as a comment in Workday. This will serve as documentation in the event there is a delay in payment. The comment should also explicitly state if there is no action needed by AP at the time of send back (as the invoice is being researched). Once the comments are in Workday, the DBO should send the invoice back to AP. See Sending Electronic Invoices Back to AP for more detail. If it is determined by the PI or delegate and DBO that the sent back invoice cannot be paid, the DBO should email email@example.com and request to cancel the invoice. If it is determined that the sent back invoice can be paid, the DBO should email firstname.lastname@example.org and request the invoice be rerouted through Workday for approval and payment processing.
If the explanation from the subrecipient is insufficient to render a judgment on the allowability of questioned costs, the DBO should refer the matter to OSP to determine next steps.
Invoices should not be approved for payment by the PI or delegate and DBO until all issues or concerns have been satisfactorily documented, addressed, and resolved.
F. Accounts Payable Invoice Processing
Once the invoice is approved by the DBO and the PI or delegate, the invoice is sent to AP and processed for payment to the subrecipient. If, upon submission to AP, the DBO receives a Workday error message as a result of an end date (Budget Date) issue, the DBO should follow the AP guide called Invoice Date Outside of Grant Dates. This guide provides instructions on how to update the budget date (to be within date of service on the invoice rather than the invoice date), if applicable. Once the DBO follows the steps in the guide, YSS will then update the budget date on the transaction in Workday.
G. Monitoring Payment of Subrecipient Invoices
The DBO should use the Workday report “Invoice Aging in Progress– Yale” to monitor the timely payment of subrecipient invoices to ensure compliance with 2 CFR Part 200. 2 CFR Part 200 requires Yale to pay subrecipient invoices issued under a federal prime award within 30 calendar days after receipt of the invoice, unless the invoice is believed to be improper. For more details on monitoring procedures, please refer to Procedure 1307 PR.03 Monitoring Subrecipient Activity.
Procedures for Prepayments:
The University’s preferred method of payment to a subrecipient is on a cost reimbursable basis. In unusual situations, however, and with an acceptable justification (e.g. a financially constrained entity in a foreign country), Yale will consider prepaying funds to the subrecipient in accordance with Policy 1307 Subrecipient – Establishing, Managing, and Monitoring, Section 1307.04 Subrecipient Prepayments.
Yale will consider a prepayment request only if:
- A fully executed agreement between Yale and its sponsor exists;
- Sponsor approval of the subrecipient was obtained, if applicable;
- The subrecipient completed all Yale required documents; and
- The subrecipient has fulfilled all applicable compliance requirements.
If the above requirements are met, Yale may issue a cash prepayment to the subrecipient to cover its estimated disbursement needs for an initial period (not greater than 90 days). This operating prepayment is limited to 25% of the budget period. Yale must include and attach the request and justification for the prepayment from the subrecipient’s Authorized Official to Form 1307 FR.01 Request for Subrecipient Prepayment.
If the prepayment request is greater than 25% of the budget period, it must be approved by the Executive Director, Office of Sponsored Projects, or their designee. Thereafter, Yale will reimburse the subrecipient for its actual cash disbursements, unless a subsequent prepayment is requested and approved (in accordance with Section 2.C. Requesting Subsequent Prepayments).
It must be noted that funds prepaid to a subrecipient are not those of the sponsor, but rather the department. The departmental charging instructions must be identified prior to issuing the prepayment to the subrecipient. Unspent funds not returned to Yale will be the responsibility of the department to finance using non-sponsored departmental funds.
A. Requesting a Prepayment
If a fully executed subaward signed by the subrecipient’s Authorized Official is not on file at the time of the prepayment request, the DBO must request and set-up an at-risk status on the grant in Workday. Reference Guide 1304 GD.01 At-Risk Accounts and submit Form 1304 FR.01 At-Risk Account Request. The award line lifecycle status associated with the grant for the subaward will remain at-risk until the fully executed agreement is received. The prepayment and subsequent subaward expenses incurred will be charged to the at-risk account and will not be billed to the sponsor. Once the fully executed agreement is received by Yale, the status will be updated to active and billing to the sponsor will commence.
If the above requirements are met, the DBO can begin the process to request a prepayment. The DBO must complete Form 1307 FR.01 Request for Subrecipient Prepayment and attach the request and justification for the prepayment from the subrecipient’s Authorized Official to the form in Workday. The form requires the signature of the PI and the Department Chair or Dean and the DBO Lead Administrator. The PI is responsible for authorizing the prepayment of funds to the subrecipient. All cash prepayments to a subrecipient must be guaranteed by the Department Chair or Dean (supported by non-sponsored funds). Should the subrecipient, for example, fail to complete the work, the prepayment is expensed against and financed with departmental funds, not a sponsored award.
The DBO must attach Form 1307 FR.01 Request for Subrecipient Prepayment to the supplier invoice request. The supplier invoice request must include the grant COA values for recording of the initial prepayment. Spend Category 658 – Prepaid Expenses and Ledger Account 17008–Prepaid Expenses must be indicated on the supplier invoice request.
B. Financial Reporting and Reconciliation of Prepayments
Sponsors monitor expenditure rates under individual awards within each budget period and within the overall project period. The funding that a sponsor provides for each budget period is based on an assessment of the activity to be performed during that period and Yale’s associated budget, including subawards. Federal sponsors expect the rate of expenditures to be consistent with the approved project and budget and may question patterns of accelerated or delayed spending.
DBOs are responsible for monitoring the prepaid balances issued to each subrecipient. DBOs are required to reconcile and account for previously issued prepayments, expenditures received to clear the prepayment, and any subsequent prepayments, no less than quarterly.
To properly monitor the activities of a subrecipient receiving a prepayment(s) and ensure Yale provides credible spending rate information to its sponsors, the following standards will govern subrecipient financial reporting:
- Within 60 days of month end of each reporting period (at least quarterly), the subrecipient must submit a Final Invoice (also known as a financial report) to Yale.
- The subrecipient must be able to account for the receipt, obligation, and expenditure of funds.
- The subrecipient must retain and/or provide to Yale all supporting documentation associated with the receipt, obligation, and expenditure of funds.
- The subrecipient must return to Yale all unspent funds.
Invoices/financial reports received must be reviewed and approved by the PI or delegate. The PI’s or delegate’s approval indicates the expenditures are appropriate and can be charged to the sponsored award for the work performed. Upon approval of the financial report, the DBO must prepare an accounting journal to reclassify the prepaid balance from Spend Category 658 – Prepaid Expenses/ Ledger Account 17008 – Prepaid Expense to Spend Category 217 – Subaward Expense/Ledger Account 81030 – Services – Subaward Expense. The DBO must attach the approved financial report to the journal entry in Workday.
C. Requesting Subsequent Prepayments
The need for any subsequent prepayment(s) requires the prior approval of the PI, the Department Dean or Chair, the DBO Lead Administrator, and the Executive Director, Office of Sponsored Projects, or their designee.
If a subrecipient is not compliant with the terms and conditions of the subaward agreement, OSP may deny the request for a subsequent prepayment. Requests must be made by completing the designated section of the original Form 1307 FR.01 Request for Subrecipient Prepayment, which includes a reconciliation of the previously issued prepayment.
In addition, no subsequent prepayments will be issued unless the subrecipient has submitted an acceptable financial report for a previously issued prepayment.
The DBO should keep on file the following information regarding all prepayments to subrecipients:
- Description of the unique circumstances that require a prepayment;
- Documentation of the PI’s approval for a prepayment on Form 1307 FR.01 Request for Subrecipient Prepayment;
- Documentation of approval of the prepayment by the Department Chair or Dean who guarantees the funds on Form 1307 FR.01 Request for Subrecipient Prepayment; and
- Documentation of the approval of the prepayment by the Executive Director, Office of Sponsored Projects, or their designee on Form 1307 FR.01 Request for Subrecipient Prepayment.
A. Subrecipient’s Deliverables
The PI is responsible for ensuring the receipt of all required deliverables, including technical/progress reports, patent invention documentation, and equipment reports from the subrecipient as part of Yale’s required closeout documentation for Yale’s sponsor.
B. Subrecipient’s Final Invoice
The DBO is responsible for ensuring that the subrecipient’s final invoice is received in accordance with the terms and conditions of the subaward and ensuring that all subaward costs are included in Yale’s final financial report.
C. Subaward Closeout
Subaward/Award Closeout Timeline
60 days prior to subaward end date
DBOs should begin reviewing the subaward for closeout.
Within 60 days following subaward end date and in accordance with the terms and conditions of the subaward
DBO/PI receives from the subrecipient all required reports and final invoice for approval of the PI and DBO for processing and payment
By specified date provided by OSP
Sponsored Report Tracking (Award Tasks) - Yale for the award (including subaward final financial information) is sent to OSP by DBO
After award and subaward reconciliation, and by the report due date, (generally no later than 90 days past award expiration
OSP submits the final financial report to the sponsor
After the completion of all award/and subaward reporting
OSP changes subaward status to “closed” and initiates award closing process
For additional information regarding sponsored projects financial reporting and closeout, please refer to Policy 1301 Sponsored Projects Financial Reporting and Financial Closeout.
D. Subrecipient/Subaward Record Retention
The PI and DBO are responsible for retaining subrecipient/subaward information and documentation in accordance with Yale University’s policy on record retention and the terms and conditions of the award, whichever is longer. Refer to Policy 1105 Retention of University Financial Records.
Roles and Responsibilities
Office of Sponsored Projects
- Assists in the resolution of any financial questions and issues related to invoices.
- Assists in the resolution of any subrecipient performance issues.
- Ensures the University’s records contain subrecipient related communications.
- Reviews and approves subrecipient prepayments subsequent to the initial request
- Receives subaward closeout information from the DBO and deobligates commitments.
- Reviews and approves subrecipient invoices and financial reports, verifying that claims are consistent with technical/progress reports and received deliverables.
- Authorizes the prepayment of funds to a subrecipient.
- Collaborates with OSP to resolve issues with subrecipient invoices.
- Obtains and retains all required deliverables including but not limited to final technical and interim progress reports, patent/invention documentation, and equipment reports in accordance with sponsor and University policy.
- Ensures subrecipient invoices contain all the minimum required information, as required in the subaward agreement.
- Reviews subrecipient invoices for cost allowability and ensures compliance with applicable regulations and subaward terms and conditions.
- Supports the PI in his/her efforts to ensure that payments to subrecipients are appropriate given the status of technical efforts and progress versus funds expended.
- Reviews and approves subrecipient invoices for adherence to budget and/or terms and conditions of the subaward.
- Ensures that all invoices have been approved by the PI or delegate.
- Submits approved invoices for payment in a timely manner and retains copies for department records. (Payment for subrecipients under a federal prime award must be within 30 days of receipt of the invoice.)
- Assists PI in ensuring that a request for a subrecipient prepayment conforms to University Policy 1307 and this procedure.
- Obtains proper approvals for prepayments and reconciles prepaid balances no less than quarterly.
- Assists PI in obtaining and retaining all required deliverables including but not limited to final technical and interim progress reports, patent/invention documentation, and equipment reports in accordance with sponsor and University policy.
- Completes subrecipient reconciliation form as part of close-out process.
Yale Shared Services
- Sets up and establishes suppliers in the A/P tables.
- Enters invoice information into the accounts payable system where the invoice information will be matched and verified against the subaward invoice validation routine.
- Processes invoices daily within the AP system and loads them nightly to the DBO’s Workday inbox.
- Issues payment to subrecipients for approved invoices.
- Electronically stores all approved subaward invoices.