{"id":4015,"date":"2026-09-09T10:17:35","date_gmt":"2026-09-09T07:17:35","guid":{"rendered":"https:\/\/audit-mk.com.ua\/audyt-konsortsiumu-ta-subhrantiv\/"},"modified":"2026-09-09T10:17:35","modified_gmt":"2026-09-09T07:17:35","slug":"audyt-konsortsiumu-ta-subhrantiv","status":"publish","type":"post","link":"https:\/\/audit-mk.com.ua\/en\/audyt-konsortsiumu-ta-subhrantiv\/","title":{"rendered":"Auditing Consortia and Sub-Grants: Lead Partner Responsibility and Partner Checks"},"content":{"rendered":"
<\/p>\n
When a project is delivered not by one organisation but by a consortium, the financial structure becomes more complex: the donor signs an agreement with a single organisation while several of them spend the money. For the lead partner this means responsibility for funds it did not spend directly and for documents it does not see every day.<\/p>\n
Below we look at how liability is allocated, what a sub-grant agreement must contain, how to build partner monitoring and what exactly an auditor checks in such a project.<\/p>\n
Who answers to whom<\/h2>\n
Most grant agreements follow a simple rule: the signatory of the agreement answers to the donor. If an audit finds a partner’s cost ineligible, it is the lead partner that repays the donor, and only then recovers the amount from the partner under the sub-grant agreement.<\/p>\n
The practical conclusion follows: a sub-grant agreement is not a formality but the lead partner’s main protection. It must pass on to the partner the same rules the donor imposed on the lead partner, and give the right to verify compliance.<\/p>\n
What a sub-grant agreement must contain<\/h2>\n
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the partner’s budget using the same lines as the project budget;<\/li>\n
an eligibility period that does not extend beyond the period of the main agreement;<\/li>\n
the donor’s procurement rules, passed on without softening and with the same thresholds;<\/li>\n
documentation requirements and the record retention period;<\/li>\n
the format and frequency of reporting from which the lead partner builds the consolidated report;<\/li>\n
the right of the lead partner and the donor to audit and to access source documents;<\/li>\n
the procedure for repaying amounts found ineligible;<\/li>\n
requirements on donor visibility, conflict of interest, data protection and any policies the agreement demands.<\/li>\n<\/ul>\n
A mistake visible in audits regularly: the partner receives only a budget and deadlines, without the procurement rules. The partner then spends according to its own rules, and the cost becomes ineligible for the whole project.<\/p>\n
Monitoring instead of a check at the end<\/h2>\n
A lead partner cannot simply accept reports in spreadsheet form. A workable scheme looks like this.<\/p>\n
\n
\n
Frequency<\/th>\n
What the lead partner does<\/th>\n<\/tr>\n
\n
Monthly or quarterly<\/td>\n
Receives the partner’s report with a cost register, reconciles it to the budget, queries variances<\/td>\n<\/tr>\n
\n
Once per period<\/td>\n
Requests scanned source documents for the largest costs on a sample basis<\/td>\n<\/tr>\n
\n
Once per project or per year<\/td>\n
Carries out a monitoring visit: document review, inspection of equipment, meetings with the team<\/td>\n<\/tr>\n
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Before the final report<\/td>\n
Performs or commissions a verification of partner expenditure<\/td>\n<\/tr>\n<\/table>\n
A monitoring visit is documented in a report listing the documents reviewed, the issues found and the deadlines for resolving them. This is the first document an auditor will ask for: it shows that the consortium’s control system works in practice rather than only on paper.<\/p>\n
What the auditor checks<\/h2>\n
An audit of a consortium project works on two levels. At the lead partner level the auditor examines the organisation’s own costs and its sub-grant management system: agreements, monitoring, reconciliation of reports, documentation of decisions. At partner level, depending on the donor’s terms of reference, the auditor either tests their costs directly or assesses the quality of the lead partner’s controls.<\/p>\n
Typical procedures: reconciling the sub-grant amounts in the donor report to actual transfers and partner reports; sample testing of partners’ source documents; checking that partners respected procurement thresholds; analysing whether the same cost is funded by two partners at once.<\/p>\n
The report format is set by the donor and may be ISA 805, ISRS 4400 or the donor’s template; the differences are covered in our article on ISA 800, ISA 805 and ISAE 3000<\/a>.<\/p>\n