This is a touchy matter.  Complex in terms of responsibilities and of
methodology.

My experience has been that a "desk audit" of charges/invoices seems
reasonable in most cases.  This is made much easier if the subaward is
written with a desk audit in mind.  Of course the first matter is, "did the
sub- produce?"  You will have to defer to your PI for this, but you should
specifically ask the PI if the work was completed, and was it satisfactory,
and document the answer.  The budget should be reasonable both in how it is
constructed and what local pay rates might be.  Creating the subaward
should take into consideration the identity and location of the
subawardee.  A university in a Western society should have systems
relatively similar to U.S. practice, but different organization types and
non-Western societies may create large differences.  A simple flow-down of
U.S. regulations is seldom useful.  For example, you should spell out some
basics like separate accounts, auditable records of time/effort, invoicing
requirements and the like.  I have dealt with a reputable university in a
Western society that did not do either of these, and the matter only came
to light when a completely different problem arose.  (I was able to get
them to do an internal audit sufficient that they certified explicitly to
most of the costs and removed some that were improper.)

You probably want to specify billing written in English and measured in
U.S. dollars, and the standard for conversion, e.g., the exchange rate
posted by a major international bank, and the applicable date, e.g., a
stated date quite reasonably close prior to the invoice date.  You should
be absolutely sure that the person who signs the agreement has the
authority to do so; you should be able to rely on a clause warranting that
the signator is authorized.  You should try to get some idea of underlying
audit practices and reliability for the recipient.  A number of socially
driven requirements on U.S. institutions, e.g., EEO, do not apply to
foreign subs, but others, e.g., human subjects research requirements do
apply (they may have an approved IRB, but your IRB's review may satisfy if
the contract specifies non-deviation from the specified research protocol).

The agreement should definitely have a termination for cause clause,
carefully written to cover deviations from business/administrative
requirements as well as from SOW deviations.  In areas of significant
uncertainty, you may want to issue a series of "tasks", priced by task, and
each authorized only on satisfactory completions of the previous, to
minimize the risk if things fall through.

If the PI travels to, or is familiar with, the subawardee, you will
probably want to discuss with him/her quite a bit of this, as the PI may
know a lot that you do not about the recipient and the culture.  This
discussion should start when the proposal is in preparation, so that the
"business" parts of the proposal reasonably reflect what you will put in
place in the subaward.

Seldom will you have the opportunity to have an administrative
representative from your institution visit, unless the subaward is quite
large.  So you have to think things through to put in place things that
minimize risk and make a desk audit reasonable.  You may want to have some
discussions by phone with business representatives of the foreign
subawardee to get a "feel" for their practices, and maybe get references to
other U.S. institutions they have dealt with, and then do follow up with a
call to that U.S. institution!  You may even want informal discussions with
your prime sponsor's business types; they may have experience relevant to
your situation if it falls far from the Western norm.

There is no "one-size fits all" solution.  Be reasonable, anticipate
problems, reduce risk.  And find ways to minimize problems for the
subrecipient, too; it will be appreciated.

Chuck

At 12:58 PM 6/24/2004, you wrote:
>With the expectation of closer subrecipient monitoring, can anyone share
>what plan they have in place for foreign subrecipients?  Actual on site
>auditing is a high expectation for those subrecipients in the same city,
>and we definitely can't go to foreign sites.  Although we'd have lots of
>volunteers to audit Hawaii, I doubt anyone would go to Tanzania, etc -
>so, any plans in place with one foot in reality?
>
>Thanks!
>
>Elisa Espinoza Fallows, M.S.
>
>Research Compliance Manager
>The University of Texas Health Science Center at Houston
>Phone: (713) 500-3214       Fax: (713) 500-0326
>E-mail: xxxxxx@uth.tmc.edu
>
>
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Herbert B. Chermside, CRA
Special Asst. to VP-Research
Virginia Commonwealth University
PO BOX 980568
Richmond, VA  23298-0568
Voice:  804-827-6036
Fax     804-828-2051
e-mail xxxxxx@vcu.edu

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