HOW TO AVOID UGA FINDINGS: DIRECT CONSULTANTS
In our last blog, we talked about how to avoid Uniform Guidance Audit (UGA) findings in your relationship with Direct Subcontractors. In this blog, we’ll focus on Direct Consultants.
THE DIFFERENCE BETWEEN DIRECT SUBCONTRACTORS AND DIRECT CONSULTANTS
The big difference between a direct subcontractor and a direct consultant is that a subcontractor is seen as a co-investigator in your project, with a designated scope of work. A consultant usually plays a less critical role but may still be important enough to be specifically named in the award, though they may not be. A direct consultant is a vendor that your company has hired for an ancillary good or service.
A direct consultant is working on your project and the government is reimbursing you for that work. It is your responsibility to make sure this relationship is in compliance with the FAR.
WHAT A UGA AUDITOR EXPECTS TO SEE FROM YOU AND YOUR DIRECT CONSULTANT
Your auditor will ask to see your consultant agreement, and will expect it to include the following:
- Scope of the work with deliverable in detail
- A description of how the work relates to the award
- The hourly rate to be charged
Naturally, this consultant agreement should be signed.
Invoices from your Consultant
You will be asked to produce invoices from your consultant, and your auditor will check to make sure that these invoices include the following information:
- Hourly rate to be charged (which must correspond with hourly rate in the consulting agreement.)
- Dates worked
- Number of hours worked at the consulting rate stated in the consulting agreement
- Detailed information about the work performed. The invoice cannot say, “Consulting retainer $5k”.
COMMON UGA FINDINGS FROM DIRECT CONSULTANTS
Often, direct consultants aren’t monitored as closely as employees because they are thought of as vendors. This can lead to problems because, as a rule, direct consultants aren’t as familiar with the FAR or the rules relating to your grant and can have poor billing practices.
Here are some of the most common findings UGA auditors find in direct consultant relationships:
- A non-compliant consulting agreement
- Not signed
- Doesn’t refer to the award by number
- Doesn’t contain scope of work
- Doesn’t include an hourly rate
- Invoices that lack details
- A consulting invoice should be detailed and break down the hours worked. For example: March 5th, 4 hours at $175; March 9th, 2 hours at $175 and so on.
- Broad descriptions, such as “March Consulting, $2,000“ is not sufficient.
- Issues that arise from an employee or officer of the company who is also receiving payment as a consultant.
GET THE HELP YOU NEED
Managing direct consultant relationships properly can become overwhelming when you have multiple consultants working on your project if you haven’t created the right checks and balances.
This is the fifth of our seven-part series about the Uniform Guidance Audit:
- Is Your Grant Subject To a Uniform Guidance Audit?
- What Happens During a Uniform Guidance Audit?
- How a UGA Auditor Tests Your Company’s Internal Controls
- How To Avoid Uniform Guidance Audit Findings on SF-425 Reporting
- How To Avoid UGA Findings: Direct Subcontractors
- How To Avoid UGA Findings: Direct Consultants
- What Happens To NIH and DOE Grant Audit Findings?