A subrecipient is an organization that receives federal awards from a pass-through entity rather than directly from the federal grantor to carry out a program. An organization may receive grant funds directly from one or more federal agencies and at the same time receive funds indirectly as a subrecipient.

The subrecipient is responsible for managing the program, managing and reporting the funds, managing the audit and regulatory requirements.

Managing the program

The subrecipient is responsible for ensuring compliance with the program. The organization must be familiar with eligibility requirements, allowable activities, allowable cost, reporting, etc. Based on the requirements of the program, the subrecipient must establish and maintain a system of internal controls to ensure compliance. Open communication and cooperation with the primary recipient’s monitoring efforts should be maintained.

Managing and reporting the funds

The subrecipient is responsible for establishing a system of accounting and reporting. Grant accounting for federal funds is required for subrecipients the same as federal funds received directly. Grant funds should be segregated by program or grant. The expenses charged to that grant should be directly identifiable in the accounting system. The transactions charged to the grant should be supported with proper supporting documentation. The well designed system provides accurate reporting capabilities to the granting agency.

Managing the Audit and regulatory requirements

Audit requirements depend on several factors, including amount of federal awards expended, the type of organization, and the sources of financial awards. Audit requirements are set forth in the grant documents, in OMB circular A-133, OMB circular A-128, other regulatory sources, and perhaps the primary recipient.