Summary of Audits, Settlements and Investigations Related to Sponsored Programs

Reprinted by permission of Charlene Blevens, Florida International Univ. Information on audits can be sent to blevensc@fiu.edu

Last updated May 26, 2008

Release Date

Audit/Review/Newspaper Report

Costs w/o benefit to program

Cost Share

Cost Transfer

Documentation

Expenditures/Costs

Subaward/suawardee

Compensation/Effort

Participant Support

Policy & Procedure

Investigation/DOJ

Other

05/02/08

University of California, San Diego

X

NSF

03/27/08

University of Illinois Urbana

X

NSF

03/10/08

University of California, San Francisco

X

NF

01/22/08

Georgia Tech

X

11/15/07

University of Utah

X

NSF

09/28/07

University of Maryland Baltimore County

X

X

X

X

09/06/07

Brandeis University

X

06/26/07

NIH review of Graduate Student Compensation Costs

X

NF

05/15/07

University of Iowa Hospitals & Clinics (vendor rebates)

X

04/05/07

Thomas Jefferson University

X

NF

03/31/07

California Institute of Technology

X

E

NSF

03/12/07

Georgia State University

X

X

X

E

X

CA

02/12/07

New Mexico Title IV-E Contracted University Training Costs (A-06-06-0004)

S/U

11/15/06

NSF September 06 Report to Congress

X

X

X

09/28/06

Boston University

X

X

09/26/06

University of Hawaii

X

X

X

E

CA

09/26/06

New Mexico Highlands University

X

X

X

X

CA,P

09/07/06

Tennessee State University

X

X

05/01/07 Barbara Nye, Tennessee State PI Enters Guilty Plea

06/30/06

15 University Select Agent Audit

X

X

06/16/06

University of Chicago

X

X

06/06/06

University of Pennsylvania

E

X

NSF

05/24/06

University of Arizona Sahra Center

X

X

E

CA, RC

05/04/06

North Shore University Hospital

X

04/10/06

University of Maryland

X

AC

04/06/06

Eastern Kentucky University contract with Kentucky

X

S/U

03/31/06

Howard University

X

X

X

C

03/31/06

Stephen Raper, MD, University of Pennsylvania

IRB

03/23/06

University of Massachusetts (UMMS) contract with Commonwealth of Massachusetts

X

C

S/U

03/03/06

Columbia University

X

NF

02/27/06

Roger Williams Hospital (UMMS)

X

X

X

02/03/06

Yale University (UMMS)

X

X

X

X

X

AC

07/21/06 Princeton Memo

07/03/06 Yale Memo on Agency Subpoenas

06/30/06 Yale Internal Memo on Scope of Information

Release Date

Audit/Review/Newspaper Report

Costs w/o benefit to program

Cost Share

Cost Transfer

Documentation

Expenditures/Costs

Subaward/suawardee

Compensation/Effort

Participant Support

Policy & Procedure

Investigation/Fraud

Other

01/20/06

Georgetown University

X

01/09/06

University of Connecticut

X

C

FC

2.5M RC

01/06/06

Indiana State University

X

X

X

12/28/05

University of Nevada Reno

X

X

CA,AC

11/21/05

University of Miami Rosenstiel School

NF

09/29/05

Dartmouth College

X

X

E

09/21/05

University of Rochester

X

X

NF

08/23/05

University of Massachusetts Medical School

X

X

X

X

X

RC

08/16/05

UC Berkley

X

X

X

E

06/23/05

Cornell’s Weill Medical College

X

C

X

4.4M

08/16/05 Wall Street Journal Article

06/05

Florida Agricultural & Mechanical

X

X

1.4 M Admn

05/26/05

Mayo Clinic

X

X

X

FC

6.5M

04/26/05

UTMB Galveston

C

X

04/14/05

University of Alabama-Birmingham

X

E

X

3.4 M

04/13/05

George Washington University

X

X

FC

1.8M

04/19/05 DOJ Press Release

10/04/2005 Deputy Director Pleads Guilty

X

04/04/05

Oklahoma Department of Human Services

X

S/UI

09/21/04 OKDHS Response (States argument for its claim of contributed indirect costs from University of Oklahoma)

03/17/05

University of Vermont – Poehlman (one of the most expansive cases of scientific fraud & first PI to serve jail time for fabricating data)

X

03/09/05

University of South Dakota

X

X

Admn

02/28/05

Dakota State University

X

Admn

02/15/05

Florida International University

X

X

E

11.5M

01/14/05

Northeastern University

X

X

Admn

12/04/04

State of Maine Contract with University of Maine

X

S/UI

08/03/04

East Carolina University

X

X

X

E

06/04

Harvard

X

E

2.4M

04/16/04

Northeastern University

X

X

03/02/04

San Diego State Foundation

C

2004

University of Washington

X

35M

03/12/04

John Hopkins University

E

2.6M

09/11/03

University of South Florida

X

X

C

4M,P

06/05/03

Northeastern University

X

E

5.5M, RC,AC

02/06/03

Northwestern University

E

FC

5.5M

01/28/02

Review of 10 large Research Universities

Indirect

Release Date

Audit/Review/Newspaper Report

Costs w/o benefit to program

Cost Share

Cost Transfer

Documentation

Expenditures/Costs

Subaward/suawardee

Compensation/Effort

Participant Support

Policy & Procedure

Investigation/Fraud

Other

12/17/02

40 Hospital Whistleblower False Claims; Sanford, Emory, Northwestern, University of Pennsylvania, Baylor

FC

42M IRB

06/30/00

Carnegie Institute of Washington

X

PI

11/17/98

University of Minnesota

X

FC

32M, PI

09/24/98

Tufs University

X

NF,P

09/04/97

Washington State Department of Social and Health Services Audit of Training Contract Costs

SU

04/08/97

New York University Medical Center

X

X

09/02/96

Illinois Department of Children and Family Services

SU

11/28/95

University of Colorado

RC

09/25/95

Washington University-St. Louis

X

X

RC

09/06/95

University of Utah

X

RC

07/07/95

University of Iowa

X

RC

10/26/94

Selected Universities Review of Graduate Student Compensation Charged to Research

C

01/12/94

Review of Service Centers at 12 Universities

X

RC

04/23/93

Review of 261 Schools Internal Indirect Cost Self Scrubs

Indirect

AC Allocation of Cost PI Program Income

Admn Administration includes Financial Reporting S/U State/University Agreement

CA Cooperative Agreement S/U I State/University Indirect Agreement

NF No Findings NSF NSF Effort Reporting Audit

RC Recharge Centers

P Purchases at end of Grant Period

Summary of Audits, Settlements and Investigations Related to Sponsored Programs

Reprinted by permission of Charlene Blevens, Florida International Univ. Information on audits can be sent to blevensc@fiu.edu

Last updated May 26, 2008

Summary of Audits:

Issue Date	University/ Gov’t	Funding Agency	Audit Agency (source)	Audit Finding
05/02/08	University of California, San Diego (UCSD)	NSF	McBride Lock & Associates (NSF Audit)	Significant Internal Control Procedural Cited 1) Late Effort Reports and Timeliness 59% of sample not submitted within due date. Limiting the review to the shortest amount of time possible helps ensure a more reliable certification of labor costs. 2) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers Out of date and ineffective timeliness policy, 15-day turn around time viewed as unreasonable & thus not enforceable. Establish formal monitoring processes and procedures; include periodic reminder notices with increasingly graduated scale to higher levels of management. 3) Independent Internal Evaluations University wide assessment not sufficiently comprehensive nor performed frequently enough. 4) Administrative Time Charged to NSF Awards Need to define activities associated with institutional base salary. PI & staff members charged 100% to award reported time spent on writing grant proposal or participating in University committees. Employees from 3 departments stated problem occurred because UCSD did not establish accounts for use when performing administrative type work. 5) Salary Exceeding NSF Faculty Salary Limitations or UCSD’s Incentive Award Policies Summer salary. PI charged 2 months of summer salary to one NSF grant and 1 month to another NSF grant in violation of NSF Two-Ninths Rule. Incentive Award. Employee’s incentive award based on extra effort made to a specific research project allocated to benefiting projects and not on pro rata basis to compensation from all funding sources. Inconsistent with UCSD policy and not specifically disclosed to NSF and approved through the proposal process for the subject grants. 6) Voluntary Committed Labor Effort PI’s which do not request salary support not reporting level of effort. Contrary to OMB Clarification Memo UCSD did not have formal policy or process for imputing PI effort to include in its organized research base. University decentralized many of its grant management functions to the Academic Departments
03/27/08	University of Illinois Urbana (IL)	NSF	Mayer Hoffman McCann, P.C. (NSF Audit)	Significant Internal Control Procedural Cited 1) Certification does not include total employee workload. Reports are available online but not specifically provided to PI’s during certification process. PI certifies a report of cumulative effort of individuals who work on their projects. UI Officials position: Regulations do not explicitly require certifying officials to provide after the fact confirmation to non-sponsored activities. Auditor’s position: Certification process cannot be relied upon to meet the Federal requirement for accurate labor charges if a PI lacks sufficient information. 2) Late Effort Reports and Timeliness Late certification of Labor Reports diminishes reliability as time increases. Certifying officials rely primarily on memory since they are not required to track and maintain records of an employee’s activities. 3) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers Establish procedures effort certification compilation & distribution, PI review and approval and follow up notices. Clear accountability needs to be assigned to senior managers. Average of 64 days to generate and distribute the report reasonable compared to established time frames at other universities. . 4) Independent Internal Evaluations UI relied on A-133 audit. 5) Establish a Level of Tolerance Range of accuracy for how much an employee’s actual effort can differ from certified effort before a cost transfer is required. Noted 5% used as some Universities.
03/10/08	University of California, San Francisco	NIH	HHS OIG	Audit of Administrative and clerical expenses as direct costs to National Institutes of Health grants. No Recommendations. University substantially complied with Federal regulations for claiming reimbursement for administrative and clerical expenses.
01/22/08	Georgia Tech	NSF	FBI (Newspaper Story)	$316,000 Personal Pro-Card Expenditures on Grant An administrative coordinator used five purchasing cards that were billed to a grant funded by the National Science Foundation to buy more than 3,800 items. Purchases included season tickets to Auburn University football games in Alabama, a $1,900 frozen drink machine, holographic lighted palm trees, a Waverunner, wide-screen television, electric double wall oven, dishwasher, and air conditioning units for her RV according to an affidavit signed by FBI special agent William Share. The purchases went unnoticed until August 2007, when a tipster contacted the Georgia Tech Department of Internal Auditing, according to the search warrant. The Atlanta Journal-Constitution 02/12/08
11/15/07	University of Utah	NSF	Williams Adley & Company (NSF Audit)	Significant Internal Control Weakness Cited 1) Lack of Formal Written Timeliness Standards & Accountability by Senior Managers Establish formal procedures and processes to promote timely certifications. Control weakness attributed to lack of clear, concise and well-documented policies and procedures. Cited A-110 .21(b) (1) University was issuing one reminder letter per quarter. Recommended periodic reminders at more frequent intervals, using an increasingly graduated scale to a higher-level management official. 2) Establish a Level of Tolerance The effort system was used to re-allocate substantial labor costs because these changes were not entered into the payroll distribution system when known in advance. Mentioned that some universities use 5% as the acceptable variance between actual and certified effort. Cited COGR March 2007 report which gave 5% as a general rule of thumb. 3) Suitable Means of Verification Define what is acceptable as suitable means of verification to support labor charges. One PI certified for a graduate student who devoted 28% of work to his the project but who also was working on another sponsored award for a different PI (72%). The PI did not speak with the graduate student or other PI to validate reasonableness. 4) Independent Internal Evaluation Perform a comprehensive evaluation of the system as well as establish formal policy for such required evaluations in the future. University relied on A-133 as Independent Internal Evaluation 5) Policies & Procedures Polices and procedures not updated. Auditor recommendations to improve internal control structure. Recommended that NSF work with the cognizant audit agency to develop a corrective action plan.
09/28/07	University of Maryland Baltimore County	NSF	Mayer Hoffman McCann (NSF Audit)	Four Compliance & Internal Control Deficiencies in Fiscal Management Practice Monthly Review of Expenditures · Audit identified a material weakness that UMBC personnel did not always follow the cost accounting procedures in place to ensure that the costs charged to NSF awards were accurate, allowable and allocable. Revolving account not established timely to separately record non-reimbursable costs. Monthly review of expenditures not performed timely. (Change in reporting structure and new business manager on maternity leave) Monitor Subaward Costs · UMBC did not always monitor subaward costs it charged to NSF awards. Reliance on A-133 audit report does not constitute adequate fiscal monitoring of its subawardees .Recommended UMBC develop a comprehensive subawardee fiscal monitoring plan which defines staff responsibilities. · Did not have adequate procedures to monitor the cost sharing expenditures claimed by its subawardees. UMBC never requested cost sharing data or cost sharing supporting documentation from its subawardees. Claimed cost share based solely on the cost sharing budgets. Recommended UMBC develop and implement written policies and procedures to obtain and review cost sharing data and related supporting documentation from its subawardees on a regular basis. Monitor Indirect Costs Claimed · Did not have adequate procedures in place to detect errors in the amount of indirect costs it claimed to NSF. Relied on accounting system to calculate and record indirect cost to charge its NSF awards. If direct cost removed from an award the accounting system did not remove the associated indirect cost.
09/06/07	Brandeis University	NIH	HHS OIG	Administrative & Clerical Expense The University misclassified a total of $31,303 to NIH. Specifically, the audit identified the following charges $13,400 for text and reference books, $14,107 for subscriptions to trade journals, and $3,797 for other supplies used for two open house parties to thank current volunteers and recruit new volunteers for University research projects (deemed public relations costs) that should have been included in its F&A Costs. Appendix A list specific costs. Books include course text books in excess of number of students under the grant, research article reprints, lab manuals and reimbursement of students and trainees for course textbooks.
06/26/07	Select Grants – Review of Graduate Student Compensation	NIH	HHS OIG	Review conducted at the request of two Members of Congress. No finding. University and colleges limited graduate student compensation charges to the amount paid to a first-year, post doctoral scientist performing comparable work at the same institution. Report contained no recommendations. Prior Audit 10/26/94
05/15/07	University of Iowa Hospitals & Clinics	CMS	HHS OIG	Review of Vendor Rebate Paid to Hospitals The University Medical Center received a rebate in the form of a credit memo, which could only be applied against the purchase of additional equipment. The University Medical Center used the credit memo to purchase new equipment and reflected the related annual depreciation expense on its Medicare cost report. The CMS OIG identified the rebate through a national statistical sample of rebates. The audit found that the provider did not reduce costs reported on it fiscal year Medicare cost report contrary to Federal regulations and CMS guidelines. The auditors recommended that the University revise and resubmit its Medicare cost report to reflect the rebate as a credit reducing its health care costs, Federal regulation 42 CFR 413.98 states that rebates are reductions in the cost of good or services purchased and are not income. The CMS Provider Reimbursement Manual (part 1, chapter 8) requires provides to report all discounts on their Medicare cost reports.
04/05/07	Thomas Jefferson University	HHS	HHS OIG	University generally documented cost transfers to federally funded grants in accordance with Federal requirements. Since 1996, NIH had designated the University as high risk because of questionable accounting for grant fund expenditures, specifically cost transfers. In 2000, the University entered into an institutional integrity agreement with HHS. The agreement stated that the University adopted new policy and procedures for cost transfers.
03/30/07	California Institute of Technology (Caltech)	NSF	NSF OIG	Audit of Payroll Distribution Confirmation (PDC) Voluntary Committed Labor Effort Include voluntary committed labor devoted by faculty members on Federal Projects. Payroll distribution system does not track and report actual employee activity/effort devoted to sponsored projects. Rather, the system is only required to validate salaries and wages directly charged to Federal grants. Salary costs associated with such unreported faculty effort does not properly get included in Caltech’s organized research base, thereby resulting in greater indirect costs paid by the Federal Government. Caltech has not established clear guidance and procedures to ensure that PIs properly identify and track effort voluntarily pledged as cost sharing in its Federal grant proposals. (In accordance with OMB’s January 2001 Clarification Memorandum.) Caltech should establish a methodology for reasonably estimating and calculating an amount of “committed cost-shared” PI effort to be reported in the PDC system for sponsored projects with no PI salary reimbursements and ensure such calculated amounts are supported by adequate documentation and included in the organized research base for computing the Federal indirect cost rate Late Effort Reports and Timeliness Effort Not Submitted within Policy Time Frame Caltech needs to improve the timeliness of PDC report distribution and certification. Of the 63 PDC reports reviewed for the 32 sampled employees, all of the reports were certified late beyond the 150-day timeframe established by Caltech policy. Committed PI Effort Reported on Grant Proposals Caltech did not always properly report effort that the PI had actually committed to research projects and activities in the Current and Pending Support information required to be submitted with NSF grant proposals. Establish procedures and guidance to ensure that PI committed person-months is accurately reported for all projects and activities, including the currently proposed grant, in the Current and Pending Support information submitted in NSF grant proposals as required by Chapter II, Paragraph C.2.h. of the Foundation’s Grant Proposal Guide. Independent Internal Evaluation Establish a formal requirement for an independent evaluation of the PDC system to ensure its effectiveness and full compliance with OMB, NSF, and Caltech standards. Such a requirement should include procedures to ensure a systematic review of the payroll distribution system is performed to identify reasons for any deficiencies and to make appropriate recommendations, identify the specific office responsible for performing the evaluation, and how often such an evaluation should be conducted. Cost Transferred to NSF Grant From An Overspent Federal Award We found a lack of monthly PI monitoring of Federal grant expenditures, an excessive number of cost transfers involving 8 of the 12 months of one individual’s annual salary, and a cost overrun situation with the Air Force grant. Establish procedures that require that transfers of costs from overspent Federal grants to other sponsored projects require formal written justification and certification by the PI, the Division Chair, and the Associate Director of Project Accounting that the transfer of cost is proper and benefits the receiving award.
03/12/07	Georgia State University Research Foundation Cooperative Agreement	NSF	NSF OIG (Conrad and Associates LLP)	Cooperative agreement which brings together 8 academic “partner” institutions from Atlanta Universities transferred from Emory University Inadequate Subawardee Monitoring-Audit identified a significant weakness in GSU’s monitoring of subawardee costs and cost sharing. Questioned costs include costs for which there was documentation that the recorded costs were expended in violation of the law, regulations or specific conditions of the award. Costs without adequate support by the awardee and costs that require interpretation of allowability by the NSF. Recommended that GSU establish a risk-based monitoring program to ensure that costs were compliant. Inadequate Documentation Payroll Expenses - Center charged for work done on another grant, GSU did not take adequate care in maintaining required documentation, and did not always follow its policies and procedures. Transfers made without explanation or source documentation. Could not locate personal action forms. Non-Payroll – Unable to provide documentation to substantiate that international travel expense related to this award or the travel was properly approved. Unable to provide documentation that purchases were properly authorized, supplies were received or that charges were incurred on behalf of the grant. Unable to provide the contract for consulting services for an invoice. Inadequate Documentation of Non-Payroll E