Pass-Through Grant - Recording Pass-Through to Sub-Recipient
Recording the pass-through of federal grant funds from a recipient government (pass-through entity) to a sub-recipient organization, with the pass-through entity's monitoring responsibilities.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Expenditures - Intergovernmental (Pass-Through to Sub-Recipient) | Expenditure (+) | 185,000.00 | - |
| Accounts Payable - Sub-Recipient (Nonprofit / Local Agency) | Liability (+) | - | 185,000.00 |
💡 Accountant's Note
When a state or county receives a federal grant and passes funds to a sub-recipient (city, nonprofit, local agency), the pass-through is recorded as an expenditure by the pass-through entity. The pass-through entity must include these expenditures in its SEFA, identify them as pass-through funds (with the federal agency's CFDA number), and perform monitoring of the sub-recipient's compliance. The sub-recipient includes the funds in ITS OWN SEFA. This means the same federal dollars appear in two SEFAs — the pass-through's and the sub-recipient's.
Practitioner & Systems Framework
💻 ERP Architecture
The SEFA must disclose the name of the pass-through entity (for the sub-recipient) and the identifying number assigned to the sub-recipient by the pass-through entity. Maintain a sub-recipient monitoring log documenting reviews of sub-recipient financial reports, site visits, and audit reviews. Sub-recipient audit reports (if they also exceed the $750K threshold) must be reviewed by the pass-through entity.
⚠️ Audit Flags
Pass-through entity responsibilities under 2 CFR Part 200.331 are a major Single Audit finding area. The pass-through entity must ensure sub-recipients have current registrations in SAM.gov, appropriate internal controls, and conduct Single Audits if required. Failure to monitor sub-recipients is a systemic weakness finding.
📄 Required Documentation
Sub-recipient award agreement (identifying CFDA/ALN number and federal award info), sub-recipient monitoring checklist, sub-recipient financial reports reviewed, sub-recipient audit report (if Single Audit required), SAM.gov registration verification for sub-recipient.
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