New Subgrantee Agreement Requirements and What They Mean for Your Single Audit

The 2024 revisions to the Uniform Guidance changed how federal pass-through arrangements get tested in a single audit, and most subaward agreement templates haven’t caught up. The rules in 2 CFR 200.332 now require specific elements in every subaward, a documented risk assessment of each subrecipient and ongoing monitoring calibrated to that risk level. Auditors are increasingly focusing on whether pass-through entities can demonstrate compliance with these requirements. For nonprofits passing federal dollars to partner organizations, the work that protects your single audit happens before the agreement gets signed, not after the auditor’s letter arrives.

What Changed in the 2024 Subgrantee Agreement Requirements

The 2024 Uniform Guidance revisions sharpened the pass-through entity rules in 2 CFR 200.332, and auditors are testing them with more precision than they did under the prior version. Subaward agreements now have to clearly identify the subaward as a subaward and include specified award information for every pass-through arrangement. According to the National Endowment for the Humanities’ guidance on pass-through entities, required elements include:

• The federal award identification
• The assistance listing number and program title
• The federal awarding agency
• The period of performance
• The indirect cost rate to be used

The terminology itself has shifted. The “CFDA number” was retired and replaced by the Assistance Listing Number (ALN) under the 2020 revisions, with the 2024 update carrying the change through the rest of the guidance. Organizations should update templates to use the current Assistance Listing Number (ALN) terminology to align with Uniform Guidance language. The 2024 revisions also raised the fixed-amount subaward threshold from $250,000 to $500,000. Cybersecurity safeguards became a recipient and subrecipient obligation and the monitoring requirements expanded when a subrecipient experiences “significant developments” that affect performance.

How Subrecipient Monitoring Drives Single Audit Compliance

As the pass-through entity, you’re responsible for monitoring your subrecipients across the full award period. That obligation isn’t satisfied by signing the agreement and waiting for quarterly reports. The 2024 revisions reinforce and clarify the requirement that pass-through entities assess subrecipient risk before issuing the subaward and tailor ongoing monitoring to that risk level. A new organization with no federal grant experience requires significantly closer oversight than an established partner with a clean single audit history.

During the single audit itself, auditors will examine the monitoring procedures as part of compliance testing. Documentation has to show that policy was followed, not just that policy existed. Site visit reports, expenditure reviews, correspondence about compliance issues and follow-up evidence on every flagged item all become discoverable during testing. Inadequate monitoring of subrecipient compliance issues can result in findings for the pass-through entity, even when the underlying compliance problem occurred at the subrecipient.

Build Agreements That Hold Up to Auditor Scrutiny

Strong subaward agreements start with clarity.  Subrecipients need to understand exactly what they’re receiving, what compliance rules attach to the funding and what’s expected back in reporting. The agreement should spell out the allowable cost principles, the procurement standards, the reporting cadence and the consequences for missing deadlines or operating outside the approved budget.

Federal regulatory language doesn’t translate well as-is into a subaward agreement, especially when the subrecipient is a small community organization with limited administrative capacity. A 47-page agreement full of regulatory citations is a compliance liability, not a compliance solution, because subrecipients who don’t understand the rules can’t follow them. The fix is a plain-language translation of the relevant requirements, paired with a clear escalation pathway when reports come in late or expenditures drift from the approved budget. Consequences laid out upfront prevent uncomfortable conversations later and shift the dynamic from enforcement to alignment.

Make Subrecipient Monitoring Operational

The administrative weight of doing this well is real, but standardized tools make the workload manageable. Build a monitoring checklist that applies across all subrecipients, with desk reviews handling the bulk of routine oversight and site visits reserved for higher-risk relationships. Schedule regular check-ins instead of waiting for problems to surface. A quarterly call to review spending patterns, performance against deliverables and any emerging compliance concerns lets small issues get resolved while they’re still small.

Documentation is the audit defense. Every conversation, every expenditure review, and every follow-up on a flagged item needs to be documented in writing, even if it’s a brief email memo. The patterns single auditors test against, including the specific elements covered in a single audit, all assume contemporaneous documentation, which is easier to produce as you go than to reconstruct after the auditor’s letter arrives.

Get the Agreements Right Before the Audit Tests Them

Pass-through arrangements either run on disciplined infrastructure or generate findings. The agreements, the risk assessments and the monitoring documentation all have to exist before the auditor asks for them. James Moore’s nonprofit accounting team builds subaward agreement templates and monitoring frameworks that align with the 2024 Uniform Guidance.  Contact us today.

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