The Campaign for McMaster University Tri-Council Monitoring Visit Fall 2009

Tri-Council Monitoring Visit  Representatives from SSHRC and NSERC conducted an on- site monitoring visit during the week of September 28 th to October 2, CIHR was unable to attend due to scheduling conflicts.  Met with officials and staff responsible for grant funds administration at the University  Reviewed transactions from NSERC, SSHRC and CRC accounts for fiscal year (April 1st to March 31st) and followed-up on issues as they arose  Met with grant holders to determine their satisfaction with the administrative support available to them to support proper management of their funds, and  Held an information session for faculty and staff on the proper use of their grant funds The Campaign for McMaster University

Objectives of the Review  Review the effectiveness of policies, controls, and systems in place to ensure that the agencies’ policies and regulations were followed and that research funds were well managed.  Ensure that grant holders use their research funds in accordance with the agencies’ policies, regulations and guidelines.  Ensure that grant holders are properly supported by the institution in effectively managing the research funds, and  Share and disseminate information on agency requirements.

Findings - Strengths  McMaster demonstrated a good process for Biohazard certification  There was mandatory training on ethical requirements for students and researchers, and  Good processes were in place for the reconciliation of the Travel Advance directly on the Travel claim

Findings – Improvements from Previous Tri- Council Visit 2003  Improvements in use of grant fund transfer letters when transferring funds to other Institutions  Formal GRF (General Research Fund) process was implemented  RTS (Release Time Stipend) management process was implemented

Findings –Areas of improvement Management Control Framework Context: Financial Management Framework both centralized and decentralized Gaps: Roles and responsibilities of staff:  Roles and responsibilities of Departmental administrators and Researchers not well documented and not well understood.  ORS staff - review travel and personal expenditure claims for payment. Other types of expenditures under $2,500 are not reviewed.  Decentralized staff - Departmental administrators review expenditures primarily for compliance with University requirements, not for Tri-Agency requirements. Training:  Formal ongoing training for staff and researchers involved in the day to day administration of grant funds not provided. Oversight:  Ongoing monitoring of the effectiveness of the administration of grant funds not comprehensively undertaken.

Findings – Areas of improvement  Compliance and Eligibility Review  Responsibility for ensuring that expenses charged to grant accounts are eligible is seen as the grant holder’s responsibility.  Some of the grant holders interviewed indicated that they are not familiar with Tri-Agency guidelines.  Expenditures under $2,500 are not reviewed for eligibility nor compliance. All transactions made through service contracts and bookstores or other internal stores are not verified for compliance and eligibility to Tri-Agency guidelines.

Findings – Areas of improvement Authorization by grant holder  Many transactions reviewed did not have the authorization of the grant holder or his/her delegate. According to Agency guidelines: The Grantee is responsible for authorizing expenditures from his/her grant account in accordance with the Agency's requirements and conditions of grants and with the Institution's policies. No other party may initiate or authorize expenditures from an Agency's grant account without the Grantee's written delegated authority. All claims must have the Grantee or delegate's signature. The signatures certify that:  all expenditures on the claim are for the purpose for which the grant was awarded;  the charges included have not been claimed for reimbursement from other sources; and  reimbursements for expenditures received from other sources or Institutions will be disclosed to the administering Institution.

Findings – Areas of improvement Travel Expenses  Missing supporting evidence:  Conference prospectus information  Supporting documentation  Affiliation of the traveler to the research  One-over-one signature exercised by admin staff on behalf of the Chair or Department Head  The required countersignature validates the relevance of the travel to the research project and provides supervisory approval.

Findings – Areas of improvement Hospitality Expenses  Missing supporting evidence for expenditures: number of participants purpose of the event

Findings – Areas of improvement Salary Limits  No monitoring process to ensure that the salary limits established by the Agencies for post graduate and fellowship individuals paid from research accounts were respected.  No monitoring to ensure the person receiving a salary from research grant funds met the eligibility requirements set by the Tri-Agencies.

Findings – Areas of improvement Charges from internal services and stores  The University relies on grant holders to review their account statements to confirm accuracy of internal charges (negative approval process)  The University does not have an oversight process in place to periodically review the compliance and eligibility of internal charges to grant fund accounts

Findings – Areas of improvement Shared Costs  Shared costs are not approved by the Grant Holder or his/her delegate. Examples of shared costs are photocopying, glasswashing charges  Grant Holder is not provided with sufficient information to justify the expenses charged against his account.  Basis of calculation of the attribution of shared costs are not clearly defined.

Findings – Areas of improvement Internal Adjustments  Journal voucher adjustments on the research grant accounts are made without the approval of the Grant Holder.  Consequently, some adjustments to research grant accounts may not be compliant or eligible.

Conclusion  Therefore, the Agencies found that the financial control framework of the Institution pertaining to the management of grant funds to be non-satisfactory.  Consequently, the next financial monitoring review will be held in approximately 2 years to ensure that processes have been put in place to ensure that we meet Tri-Agency requirements.

Steps Going Forward  Process Re-engineering efforts have begun:  Bookstore (Titles and Media Shop)  Stores (ABB and FHS)  Expense Reports  Systems Contracts  Journal entries  Re-engineered processes will be consistent for all research accounts, regardless of sponsor  Processes will be consistent  Eligibility will vary

Process Re-engineering  Processes are being reviewed for:  Eligibility oversight  PI or delegate approval  Safeguarding of original receipts

Benefits of Change  Continued funding  Implementation of best practices  Greater transparency of expenses posted to accounts  Processes will be applied consistently across faculties and departments

Expense Reports  Non-compliant expense reports will be returned to department with checklist, clearly identifying deficiency  Please ensure that a complete descriptive of the business purpose of the travel is fully documented (eg no acronyms, relation to research is provided)  Appropriate approval is obtained – For PIs, this is the Dept Chair or the Dept Chair’s Delegate (in the FHS only)  Tri-Council Information Sessions will be organized by FHS Finance on a semi-annual basis

Expense Reports

Policy for Bookstore Purchases  Only grant holder and delegates will be able to purchase goods charged to research accounts  Purchaser will inform cashier of account #  Purchaser will show cashier employee ID badge  Cashier will input ID into Point-of-sale system  System will check that purchaser is authorized for particular research account as identified through FAS system  Purchaser will sign original receipt, to be maintained by bookstore  Bookstore prepares daily detailed file of transactions charged to Research account and forwards to the Research Finance Office for review to determine eligibility. If item purchased is ineligible, the purchaser will be contacted for an alternative account

To-Be: Recommendation - Stores  Develop & implement a Stores’ system (or interface) to the PI or delegate (if designated) a monthly statement of sales sorted by G/L, detailing the line items, description, unit price and extended price  The monthly statement will ask the PI to notify Stores if:  any transactions are incorrect  if the statements should be forwarded to another individual  Remove all ineligible items from Stores (complete)  Develop & implement a Stores’ system (or interface) to the PI or delegate (if designated) a monthly statement of sales sorted by G/L, detailing the line items, description, unit price and extended price  It will then be the PI or delegate’s (if designated) responsibility to sign statement of sales to indicate approval and retain for audit purposes. Benefits:  PI will have a consolidated statement of purchase details from Stores matching the line item on the monthly FAS reports  No risk of ineligibility as all questionable items have been removed from inventory

Systems Contracts  Issue involving Systems contracts is PI approval (delegate) and Eligibility Review  Preliminary Stakeholders meeting has occurred to get feedback from Research Community as to how we can correct these deficiencies.  Further Risk Assessment workshop is going to be held at the end of Sept to develop a proposed solution  Further information will be forthcoming

Journal Entries For all journal entries, charges to Research Accounts must be approved by PI or their delegate on that Research account. If at all possible, approval should be done prior to journal entry being made. approval is an acceptable form of documentation and all documentation must be retained for audit purposes. If getting prior approval is not achievable, approval within a reasonable time frame is acceptable (30 days) Adequate documentation must be retained supporting the basis of the charge…eg time sheets, usage logs. If your department charges an hourly charge for some reason, backup supporting how this hourly charge was arrived at is usually requested by Tri-Council reviewers. Eligibility Review will be conducted by the Research Finance Office when approving the journal entry. The above points must be taken into consideration for all journal entries. FHS Research Finance Office will be contacting each department shortly to set up a time to discuss the preparation of journal entries within their departments and to offer any guidance to ensure the above conditions are met.

BMO MasterCard  Individual Cardholder statements will be forwarded to the Cardholder for processing  Using the Accounts Payment Summary Sheet located at the Cardholder (or someone on behalf of Cardholder) completes this form attaching the original statement and the receipts in support of the charges.  Approval of charges charged to research accounts must be signed by PI or their delegate. This can be done on actual receipts or on Accounts Payment Summary Sheet reconciliation.  Department will then prepare the journal entry necessary to clear the clearing account  The journal entry and supporting documentation is then forwarded to the FHS Research Finance Office for review and approval. A completer of the journal entry can have a departmental approver, however that dept approver must change the approver to SYMONSR before forwarding the documents to FHS Research Finance.  FHS Research Finance Office will manually approve the entry upon review at this point in time, and forward necessary paperwork to A/P  A/P will conduct their review, noting that Research Finance approval has already been obtained and approve the journal entry within ORACLE  The journal entry will now appear on FHS Finance approval screen and will now be electronically approved by the FHS Research Finance Office

Tri-Council Info. Sessions  “Using Your Research Grant Funds” will be posted to the FHS web-page: