The Gold Standard: Sharing Tips of the Trade and Best Practices 2017 AOA Conference San Diego, California Audience Poll – Who has pre and post award processes combined? Who has pre and post award processes separated?

Objectives Pre and Post Award Process -- Discuss the pros and cons of combined vs. separate offices Internal Controls – Discuss what constitutes a good internal control, and be able to identify effective key controls that can be used for the R&D program Discuss Common Issues, Trends, Tips and Best Practices

Pre & Post Award Process -- Combined or Separate? “One man’s ways may be as good as another’s, but we all like our own best.” Audience Poll – Who has pre and post award processes combined? Who has pre and post award processes separated?

Roles of the Pre Award and Post Award Process Pre Award Roles Post Award Roles Roles/Responsibilities that may fall in both Compliance Reporting Subrecipients CLA has seen pre and post award processes and responsibilities done different ways. (Briefly discuss different roles within each group) What we are going to focus on this morning, is what we have seen/observed in regards to universities that have combined pre and post award processes and those that have separated pre and post award processes.

“Working together works.” AOA University #1 “Working together works.”

Background: AOA University #1 Post-Award Statistics $106M in awards $104M in expenditures Experienced expenditure growth of 16.5% annually over the past five years Staff has not increased significantly during that time frame 1 Assoc Dir; 4 Sr. Research Administrators; 2 Grant Coordinators

Background: AOA University #1 Post-Award History Co-located with the pre-award office in before combining with pre-award in 7 months later as Sponsored Programs Oversight under Vice President for Research Many adjustment issues after combination

Advantages of a Combined Office One Vice President to provide vision and leadership One Director to manage office Unification of policy, procedure, and process Better staff understanding of cradle to grave business process Team work is easier

Disadvantages to a Combined Office Potential audit issues – no separation of duties Potential for weak or dysfunctional relationship with other divisions at university if under Research, then potential relationship issues with Finance or vice versa Sometimes there is little understanding by your division leadership for aspects of your workload that may be more familiar to another division (try explaining F&A proposal development to a sociologist) Training a professor on Uniform Guidance Requirements

Culture at AOA University #1 New mission and focus for institution Workload changes Technology External and internal environmental awareness Experience with non-standard research issues Reputation of the university

Culture – Centralization vs. Decentralization Considerations University Systems Use to your advantage Risk Management and Office Role Distribution of Activities Time/effort monitoring Expenditure monitoring Other post award activities

Communication “Seldom, very seldom, does complete truth belong to any human disclosure; seldom can it happen that something is not a little disguised, or a little mistaken.”

Communication in a Combined Office Weekly meetings between Associate Vice President for Research and Executive Director Weekly individual meetings with Executive Director and Associate Directors of pre and post award to discuss issues Monthly combined meetings of Executive Director and both Associate Directors Monthly staff meetings Regular meetings with Finance Division staff

Lessons Learned at AOA University #1 “We have all a better guide in ourselves, if we would attend to it, than any other person can be.”

Lessons Learned Quantify Create policies and procedures Write it down and document Business process redesign Quality Network COMMUNICATE

The experience of a separate post-award office AOA University #2 The experience of a separate post-award office

AOA University #2 Pre and Post Award Structure AOA University #2 has separate Pre and Post Award Offices Pre-Award and Contracts combined – Report to VP for Research Post Award – Report to VP for Finance Contracts eventually combined with Pre-Award Previously co-located with Post Award

Background: AOA University #2 Statistics Carnegie Foundation designation Very High Research Activity $145M in Awards $149M in Expenditures 2,800 Active Awards Cognizant Agency is DHHS Major Sponsors are NSF, USDA, HHS No Audit Findings

Duties of Post Award Admin Award Set-up in FIS – Banner Invoicing Agencies Accounting/Monitoring Budget Changes No Cost Extensions Reporting/Closeout High Risk Expenditure Approvals Audit Coordination Cost Share Subcontract Admin Electronic Filing System Effort Reporting Fellowship Admin Training Campus Department Staff

Advantages of Separate Offices Commended by Internal Audit Allows for Separation of Duties Maintain Focused Missions Post Award Reports to Finance VP Understanding of Financial Issues

Disadvantages of Separate Offices No Flexibility for Exceptions Unique Circumstances Post-Award very focused on Regulations Pre-Award Doesn’t Understand Post-Award Issues with Invoicing and Budgets Communication Breaks Down or Non-Existent Conflicting Policies and Procedures Hard to Establish “Seamless Operation” with Faculty

Culture – Centralization vs. Decentralization at AOA University #2

Business Centers at AOA University #2 Central Accounting Office Pay Bills up to $500,000; Reimbursements Process HR Actions Review Proposal Budgets Effort Report Monitoring Reports to Finance and Administration Ensures Compliance Provides Separation of Duties for Colleges

Business Centers at AOA University #2 Train Staff Grant Accountants come to OPAA for Training Immersion in OPAA (Central Admin functions) Train for 4-6 months Include in staff meetings/social functions when return to Business Center Grant Accountant from OPAA will Rotate to Business Center to Establish Compliance Culture OPAA (Office of Post Award Administration)

Communication Between Separate Pre-Award and Post-Award Offices Close Proximity of Offices Co-locate if you can Meet Weekly to Discuss Issues Develop Joint Policies and Procedures Develop Joint Communications to Campus Develop and Present Training Jointly Review Websites for Conflicting Information

Communication Between Separate Pre-Award and Post-Award Offices Release Data Jointly AOA University #2 offices work together for award and expenditure data releases Host Joint “Meet and Greets” for Campus Create Opportunities for Staff Get to know each other Mentor each other in procedures Encourage team building

Communication in General Ad hoc work or issue groups AOA University #2 utilizes for policy implementation Formal university committees Informal networking within university AOA University #2 meets monthly with campus University Research Administrators External networks and groups

AOA University #2 Story - Today The University has now combined pre/post award processes The transition was difficult due to lack of communication and buy-in from staff. Maintained segregation of duties – processes pretty much the same. They now report to the same VP. Definitely recommend combining Pre/Post Awards as long as it is set up right. Communication is key.

Humboldt State University Sponsored Program Foundation “Our Model”

Humboldt State University – Our Model History Previously a standalone auxiliary doing their own accounting/payroll focused mainly on post award Contracted with campus to do accounting/payroll 6 years ago. Remaining grant analysts became state employees and reimbursed the state Established a pre-award office with two people Everyone reported to the Director of the Foundation

Humboldt State University – Our Model Things that Work Combined pre and post works great Utilizing campus accounting allows us to focus on our expertise A Compliance Officer position keeps everyone on track Challenges Providing great customer service as volume increases Not rushing to hire on revenue spikes Locating qualified employees Tension between campus and auxiliary over excess money

What has your experience been? Audience Feedback What has your experience been?

Considerations

Considerations and Other Comments Size and planned growth of the program Culture Resources Increased funding (# of Contracts, compliance, reporting) Team vs. autonomy - Culture is a good work environment – size could make it harder to work together if separate

Questions

Internal Controls

Internal Control Needs for Research Administration General Internal Controls Communication of policies, procedures, and funding agency requirements Segregation of duties between initiating, authorizing, and recording Monitoring activities for all funds passed to subrecipients

What is the Risk? Fraud in Higher Education Failure to Comply with Federal Requirements

How Fraud Happens PRESSURE Opportunity Rationalization Emergency/Favors Financial Stress/Greed Career Advancement PRESSURE No one is watching Inadequate Segregation of Duties Lack of Management Review Opportunity The requirements are unreasonable and unnecessary Money “belongs” to them for research Results would have been similar if the research was completed Rationalization

Procurement Fraud in Research Bid Rigging Bidders agree to manipulate the process Rotation of bid awards Sharing of bids with bidders Bribery Vendors provide kickbacks in order to be awarded contracts Gifts, money, trips Conflicts of Interest Hiring relatives to work on grant funded projects Awarding contracts to related parties without disclosure

Procurement Fraud Continued Phantom Vendors Set up of fictitious vendors Payments diverted for goods and services not received P-Card Misuse Employees pay for personal items with P-Card Splitting Employees divide the purchase into smaller components to avoid approval thresholds

Asset Misappropriation in Research Theft of gift cards Theft of computer equipment Medical supplies sold for cash

Overstatement of Credentials/Results False Information in Grant Applications Employee Overstatement of Degree Hacking of Results Data to Show Different Results

Some Signs You Could Have a Problem Procurement Initial contract has multiple change orders Purchase orders created on evenings and weekends Multiple vendors with the same address Asset Misappropriation Poor recordkeeping for gift cards/personal incentives Poor recordkeeping for small portable computer electronics Unusually high supply costs compared to research performed Overstatement of Credentials/Results Retracted journal articles Background checks do not support degrees claimed

Prevention before Detection Communicate policies and procedures with employees Perform technical review of proposals Ensure management review of grant reporting – financial and performance Monitor subrecipients – more than obtaining audit reports Analyze your data

Higher Education Communication Ideas The University of Central Florida hosted a screening of "Catch Me If You Can," about conman Frank Abagnale Jr. the ACFE Purdue University Chapter held an anti-fraud seminar. Utica College waived application fees for their online fraud and financial crime degree programs, as well as had a complimentary webinar centered on identity theft and money laundering.

Data Analysis Multiple purchases to single vendor Multiple invoices for same item Even dollar amounts Purchases just under approval thresholds Purchases made on evenings and weekends

Questions

Common Issues, Trends, Tips and Best Practices

Best Practices and Tips COMMUNICATION is key If you are looking to combine Pre/Post Award processes, create a team to be part of the process for the project. The team should consist of the Pre Award Officer (obtain the grant), Contracts Officer (grant reviewer-for consistency), Accounting (responsible for Post Award accounting/compliance) Property management runs weekly queries to see what was purchased and coded as equipment. They DO NOT wait for people to tell them, as they know this may or may not happen. Be proactive.

Best Practices and Tips Pre and Post Award have different expertise, work closely together to provide the best service so the PIs can do their work. Every grant gets reviewed by a Senior Accountant once per quarter. This allows the ability to catch errors and correct them along the way. Spread the work as best as possible so no one individual is overburdened - especially during quarterly federal reporting.

Questions

Steve Karp Nancy Jones, CPA Caroline Wright, CPA Director Interim Dean of Research Humboldt State University 1 Harpst Street Arcata, CA 95521 707-826-4190 karp@humboldt.edu Nancy Jones, CPA Director CliftonLarsonAllen LLP 3000 Northup Way, Suite 200 Bellevue, WA 98004 425-250-6100 nancy.jones@CLAconnect.com Caroline Wright, CPA 601 West Riverside, Suite 700 Spokane, WA 99201 509-363-6300 caroline.wright@CLAconnect.com