TLDR
A pass-through entity (PTE) that further subawards federal funds has defined obligations under 2 CFR 200.331 and 200.332. First, it determines whether the downstream party is a subrecipient or a contractor by applying the substance-over-form test in 200.331. For every subrecipient, the PTE discloses required federal award data (FAIN, Assistance Listing number, amount, indirect cost rate), runs a risk assessment, selects proportionate monitoring activities, follows up on any deficiencies, and issues management decisions on audit findings when the subrecipient has a single audit.
BLUF
Pass-through entities that further subaward federal funds must follow 2 CFR 200.331 and 200.332. The PTE classifies each downstream party as a subrecipient or contractor, discloses the required federal award information to subrecipients, runs a risk assessment, monitors proportionate to risk, and closes audit findings with timely management decisions. Weak subrecipient monitoring is one of the most common federal single audit findings.
TL;DR
- 200.331: substance-over-form test to distinguish subrecipient from contractor.
- 200.332(a): mandatory federal award disclosures (FAIN, Assistance Listing, amount, indirect cost rate, requirements).
- 200.332(b): risk assessment factors.
- 200.332(d): monitoring activities, including financial report review, follow-up, and management decisions.
- Management decisions: within six months of receiving the audit report.
The 200.331 determination
2 CFR 200.331 draws the line between a subrecipient and a contractor. The substance of the transaction controls; the label on the agreement does not. Subrecipient indicators include determining who is eligible to receive federal assistance, measuring performance against federal program objectives, and having programmatic decision-making responsibility. Contractor indicators include providing goods and services within normal business operations, providing similar goods or services to many purchasers, and operating in a competitive environment.
A single contract can include both subrecipient and contractor characteristics. The PTE weighs them in context and documents the determination.
Required federal award disclosures (200.332(a))
At the time of the subaward, the PTE delivers a specific data package to the subrecipient:
- Subrecipient unique entity identifier
- Federal Award Identification Number (FAIN)
- Federal award date and period of performance
- Amount of federal funds obligated by this action and to date
- Assistance Listing number and title (the former CFDA number)
- Indirect cost rate (negotiated rate or de minimis rate)
- All requirements imposed by the federal awarding agency so the subrecipient meets them
- Identification of any additional requirements imposed by the PTE
Missing or incomplete disclosure is one of the most common single audit findings under 200.332.
Risk assessment (200.332(b))
The PTE evaluates each subrecipient’s risk of noncompliance. Factors include:
- Prior experience with similar subawards
- Results of previous audits, including whether findings were resolved
- New personnel or substantially changed systems
- Extent and results of federal awarding agency monitoring
Risk results in a monitoring tier. High-risk subrecipients get more frequent report review, more desk and site visits, and more training and technical assistance. Low-risk subrecipients still get baseline monitoring, just less intensive.
Monitoring activities (200.332(d))
At minimum, the PTE:
- Reviews financial and performance reports
- Follows up to ensure the subrecipient takes timely corrective action on deficiencies
- Issues management decisions on audit findings within six months of receiving the audit report
- Provides training and technical assistance proportionate to risk
- Verifies the subrecipient has a single audit when required under 2 CFR 200 Subpart F
The PTE documents each activity. Auditors check whether the monitoring plan matches the risk assessment and whether the evidence supports the plan was executed.
Audit follow-up
When a subrecipient has a single audit with findings relevant to the PTE’s federal award, the PTE:
- Reviews the findings
- Issues a written management decision within six months of receipt
- Tracks the subrecipient’s corrective action
- Documents the closure
Unresolved findings can result in withheld funds, special award conditions, or escalation to the federal awarding agency.
Common subrecipient monitoring findings
- Missing 200.332(a) disclosures in the subaward agreement
- No documented risk assessment, or risk assessment not tied to monitoring plan
- Monitoring plan not executed as documented
- Management decisions issued late or not issued
- Single audit status not verified for subrecipients above the audit threshold
What GrantPipe Does Here
GrantPipe tracks every subaward, risk tier, monitoring activity, audit report date, and management decision deadline in one record, alongside the federal award data required under 200.332(a), so PTEs can show auditors a clean trail from subaward to closeout. Start a trial.
Free resource
Get the Nonprofit Grant Compliance Checklist
A practical checklist for post-award grant compliance: restricted funds, reporting cadence, audit prep, and common failure points. Delivered by email.
Source: OMB 2 CFR Part 200 revision (2024)
Source: Government Accountability Office, Standards for Internal Control in the Federal Government
- Pass-through entity (PTE)
- A non-federal entity that provides a subaward to a subrecipient to carry out part of a federal program. PTEs carry the monitoring obligations in 2 CFR 200.332.
DEFINITION
- Subrecipient
- A non-federal entity that receives a subaward from a PTE to carry out part of a federal program, accountable for programmatic performance. Defined under 2 CFR 200.331.
DEFINITION
- Contractor
- An entity that provides goods and services within normal business operations to a PTE, without taking on programmatic responsibility for the federal program. Distinguished from a subrecipient in 2 CFR 200.331.
DEFINITION
- FAIN
- Federal Award Identification Number, the unique identifier for a specific federal award. Required disclosure to subrecipients under 2 CFR 200.332(a).
DEFINITION
- Management decision
- The PTE's written determination on a subrecipient audit finding, required within six months of receipt of the audit report under 2 CFR 200.332(d)(3).
DEFINITION
Q&A
Is the 200.331 test a checklist or a judgment call?
Both. 200.331 lists characteristics of subrecipients (determines who is eligible to participate, measures performance against program objectives, has responsibility for programmatic decision-making) and contractors (provides goods or services within normal business operations, provides similar goods to many purchasers, operates in a competitive environment). The determination turns on the substance of the transaction; no single characteristic is dispositive.
Q&A
What monitoring intensity is appropriate?
Monitoring intensity scales with risk. A new subrecipient with audit findings and significant federal dollars warrants more frequent financial report review, desk reviews, site visits, and technical assistance. A long-standing subrecipient with clean audits and modest funding can be monitored more lightly. The PTE documents its risk assessment and the rationale for the monitoring plan chosen.
Q&A
What happens if the subrecipient has a single audit finding?
The PTE reviews the audit report, issues a management decision within six months, tracks corrective action, and documents follow-up. If the finding is material and not corrected, the PTE may need to withhold funds, impose special conditions, or escalate to the federal awarding agency.
Frequently asked