1307 PR.02 Managing Subrecipient Activity Associated with Sponsored Programs
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 and matching of the invoice by Yale Financial Services Center (“FSC”), unless the invoice is believed to be improper. An improper invoice is considered to be any invoice that needs additional information and/or documentation from the subrecipient prior to Yale’s approval and eventual processing for payment. 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. FSC processes invoices daily within the Accounts Payable (“AP”) system and loads them nightly to the Cost Center’s Workday inbox to begin their review and approval process for eventual payment.
In order to process a subrecipient invoice for payment, the following factors must be applied/met:
- Usage of Spend Category 217 (automatically added by system);
- Subrecipient invoice is matched to the correct Supplier Contract and accompanying GR Line; and
- Sufficient fund balance remains on both the Supplier Contract and accompanying GR Line.
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 delegate, 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 for this purpose. 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 obtained 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 not able to approve the invoice.
C. Department Review and Approval of Subrecipient Invoices
Once the PI or delegate approves the invoice, the Cost Center P2P Invoice Specialist verifies the charging instructions are accurate and then uploads and submits the invoice, along with 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, funds availability, and the terms and conditions of the related subaward (refer to Procedure 1101 PR.06 Approval Authority). 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 compliance with the requirements of the subaward. The invoice must include the following information, unless otherwise indicated as a specific payment term in the agreement as “optional”:
- subrecipient name;
- date of invoice;
- supplier contract number;
- invoice number or reference;
- “remit to” address for payment;
- period of performance covered by the fully-executed agreement (billing period);
- period of performance covered by invoice (displaying expenditures for the period);
- 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 (required);
- subrecipient contact person with respect to the invoice, if indicated; and
- a certification statement on each invoice as to the truth and accuracy of the invoice (required on all invoices, whether federal or non-federal).
- Note: All Federal subaward invoices must include the following statement: “By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812).
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 (in response to questions raised by Yale or the subrecipient revised the invoice) and the original “improper” invoice was matched but not yet paid, the DBO should follow the steps listed below to complete the invoice payment process:
- If the revised invoice has the same invoice number as the original invoice that was previously processed into Workday but not paid:
- The revised invoice should be emailed to firstname.lastname@example.org. The email should include a request to forward the attachment (revised invoice) to the AP Quality Assurance Queue for uploading into the existing (original) invoice record and make any necessary record updates.
- The original invoice should remain attached in the Workday invoice record. The revised invoice should be labeled “Revised Invoice” when attached. AP will attach the revised invoice to the Workday invoice record.
- If the subrecipient submits a new invoice with a unique invoice number replacing a previously submitted invoice residing in Workday, the DBO should cancel the previous invoice (note that the cancelled invoice remains in the record for audit purposes):
- Pull up the original invoice record in Workday;
- Select the “Add Approver” option;
- Select the AP Data Entry Specialist group;
- Check all users included in that group;
- In the “Comments” section, request that the previous (original and any subsequent invoices) invoice be cancelled as an invoice was submitted with a unique invoice number replacing the previously submitted invoice(s); and
- Finish processing the invoice for payment by sending it to email@example.com.
- Revised invoices submitted subsequent to the original invoice will need to follow the processes described in the “PI Review and Approval of Subrecipient Invoices” and “Department Review and Approval of Subrecipient Invoices” sections to be paid.
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 the “Comments” box in Workday. This information will serve as documentation in the event there is a delay in payment and to address any potential audit concerns. Comments should explain why the invoice is considered improper for either scenario described below.
- If the DBO determines that they expect the issue(s) to be resolved in a reasonable timeframe, the DBO should add a comment in the “Comments” box that they are waiting for a revised invoice, click “Save for Later” in Workday and wait for the requested information/clarification from the subrecipient.
Note: A “reasonable timeframe” is determined by the DBO and is dependent on the context of the issue. A general guideline is 5 business days for resolution.
- If the DBO determines that the invoice issue(s) will not be resolved within a reasonable timeframe, the DBO should send an email to FSC and request a cancellation of the invoice. The email should contain the following information:
- Invoice Number
- Reason(s) that invoice is improper
- Request that the invoice be cancelled by emailing firstname.lastname@example.org.
The DBO should then contact the subrecipient, advise that the invoice was cancelled and to receive payment, the subrecipient must submit a revised invoice to email@example.com.
If the DBO/PI after receiving additional information is still unable to determine if the invoice is appropriate for payment, the DBO should refer the matter to the OSP Subaward Senior Financial Analyst to determine next steps for resolution.
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 an 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 an error message appears when trying to submit to AP, check the Workday Error Message Guide for common errors. The Workday Error Message guide provides instructions on situations such as 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, FSC will then update the budget date on the transaction in Workday.
G. Monitoring Payment of Subrecipient Invoices
The DBO should use the Workday report “Subaward Invoices 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.
As subaward invoices are processed for payment, the Supplier Contract amount is automatically decremented by the invoice amount. However, once paid and it is determined that a subaward invoice is incorrectly charged and must be transferred to another subaward, the transfer will NOT decrement the associated Supplier Contract. The transfer of a subaward invoice from one award to another is rare; however, when it occurs, both associated Supplier Contracts will not reflect a correct balance. It is recommended that the DBO use a combination of sources such as the Account Holder Report and the Find Subawards – Yale report to monitor the total expenses incurred on both awards due to the inaccuracy of the Supplier Contracts.
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;
- The sponsor approval of the subrecipient was obtained, if applicable;
- The subrecipient completed all Yale required documents;
- The subrecipient’s Authorized Official submits a request and justification; 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 the subrecipient’s estimated disbursement needs for an initial period (not greater than 90 days). This operating prepayment is limited to 25% of the budget period. The DBO must attach the request and justification for 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, the prepayment request 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 3.C. Requesting Subsequent Prepayments, below).
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 the above requirements are met, the DBO can begin the process to request a prepayment, if warranted. The DBO must complete Form 1307 FR.01 Request for Subrecipient Prepayment and include the subrecipient’s Authorized Official’s request and justification for a prepayment.
Form 1307 FR.01 Request for Subrecipient Prepayment requires the signature of the PI, the Department Chair or Dean, and the 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 and supported by non-sponsored funds. Should the subrecipient fail to complete the work, the prepayment is expensed against and financed with non-sponsored funds. A completed Form 1307 FR.01 Request for Subrecipient Prepayment and accompanying justification from the Subrecipient AOR must be uploaded to Workday.
The DBO must attach Form 1307 FR.01 Request for Subrecipient Prepayment to the supplier invoice request in Workday. The supplier invoice request must include the grant worktag with the remaining COA values matching the departmental charging instructions indicated on Form 1307 FR.01 Request for Subrecipient Prepayment 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 with a fund other than FD02 or FD28.
B. Financial Reporting and Reconciliation of Prepayments
Sponsors monitor expenditure rates of 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 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 delegated Approver. 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. Enter the supplier contract number in the “Additional Worktags” field that appears when processing the journal entry. The DBO must attach the approved financial report to the journal entry in Workday. For additional instructions on this process, please refer to Subrecipient Prepayments: Detailed Guidance.
Note: When Yale issues a subrecipient a pre-payment(s), the balance of the Supplier Contract will NOT be accurate. The inaccurate balance is due to the manual journal necessary to transfer funds from the University account supporting the pre-payment expense to the correct GR line of the award. This transfer prevents the Supplier Contract from being decremented by the pre-payment; therefore, making the balance of the Supplier Contract inaccurate. To properly monitor subaward balances when pre-payments to a subrecipient are issued, DBOs are advised to use a combination of resources, such as, Find Subawards – Yale report and their own internal pre-payment tracking spreadsheet.
C. Requesting Subsequent Prepayments
The need for any subsequent prepayment(s) requires the prior approval of the PI, the Department Dean or Chair, the 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 for subsequent prepayment(s) must be made by completing the designated “Subsequent Payment” 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 by accessing the Subaward Reconciliation Dashboard.
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, per sponsor requirements, 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 Cost Center’s Workday inbox.
- Issues payment to subrecipients for approved invoices.
- Electronically stores all approved subaward invoices.