1. Critical Audit Issues and How to Avoid Them

2. Agenda It’s all about Compliance Audits at ECU (Internal and External)
The Federal Audit Environment – and Why ECU Should Care
Examples of Audits and Lessons Learned

3. It’s All About Compliance
Why compliance is important
Penalties and consequences of non-compliance
Specific issues to grants and contracts
What’s the worst that could happen?

4. It’s All About Compliance
Fines and penalties
Required pay back of sponsored program funding
Reputational damage
Reduction in subsequent funding
Debarment and Suspension (PI and Institution)
Escalating audits (Yale as an example)

5. How ECU is Audited ECU’s Office of Internal Audit External Audits
Annual Audit Plan – Based on Risk
Assessments of Operations, Compliance, Controls, IT/Information Security
Fraud, Waste, Misuse, etc.
Consultations
External Audits
NC Office of the State Auditor
Various project sponsors
Other ECU groups that assess risk and monitor for compliance

6. The Federal Audit Scene
Escalation of audits and emphasis on compliance from federal agencies
The Single Audit
Agency audits, Site Visits, and Data Analytics
State agencies
Independent organizations
Federal agencies
Prime Pass Through Entities

7. Work Plans Updated annually – Modified for 2019
Identifies both internal and external types of reviews
Prompts audits according to agency’s determination of risk

9. Data Analysis DATA ANALYSIS DISBURSEMENTS ENTITLEMENT PAY/
AWARD
CASH
REQUEST
ENTITLEMENT
PAY/
DISBURSEMENTS
POST AWARD
SOLICITATIONS
PROPOSALS
PRE-AWARD
REVIEW
AWARD
CLOSE-OUT
PRE-AWARD RISKS
ACTIVE AWARD RISKS
AWARD END RISKS
Funding Over Time
Conflict of Interest
False Statements
False Certifications
Duplicate Funding
Inflated Budgets
Candidate Suspended/Debarred
Unallowable, Unallocable, Unreasonable Costs
Inadequate Documentation
General Ledger Differs from Draw Amount
Burn Rate
No/Late/Inadequate Reports
Sub-awards, Consultants, Contracts
Duplicate Payments
Excess Cash on Hand/Cost Transfers
Unreported Program Income
No/Late Final Reports
Cost Transfers
Spend-out
Financial Adjustments
Unmet Cost Share
DATA ANALYSIS

10. Let’s look at some troublesome audits
What can we learn?

11. Troublesome Audits and Lessons Learned……
Howard University, UNC, UC Riverside – Issues with accurate effort certification
Michigan University and many others – Failure to observe the NSF “2 months” rule
Texas A&M – Charging personnel not actually working on the project, charging supplies not benefitting project
Howard University, University of Pennsylvania, others – too many cost transfers, cost transfers not appropriately documented
Columbia University, University of Florida – multiple issues in charging inappropriate charging salaries, charging items not benefitting the project

12. What Have We Learned?
It is very important to reconcile sponsored program expenditures at least monthly
Identify/Remove erroneous charges
Ensure costs are directly related to the project
Monitoring expenditure rate – too little or too much
Ensure appropriate individuals are paid from the award
Ensure cost sharing is being done throughout the project

13. What Have We learned? Accurate reporting of effort
Only booked when actually expended
Calculated correctly
Managed when there is a reduction of >25%
Documentation of NSF variations – 2 month rule
Correct application of IBS

14. What Have We Learned? Unallowable costs?
Costs for items/services that don’t directly benefit the project?
Appropriate documentation of cost transfers?
The reason the initial charge happened?
What caused the error?
What is being done to prevent this from happening again?

15. Resources
NSF OIG Plan: 20Plan.pdf
How NSF Uses Data Analytics:
What to Expect When You’re Expecting…Your Single Audit hat-expect-while-you%E2%80%99re- expecting%E2%80%A6your-single-audit

16. Resources
Internal Controls and the Single Audit anges-and-effects-internal-controls-2016-compliance- supplement
HHS OIG Work Plan publications/workplan/index.asp
NIH Audits publications/oas/nih.asp

17. Contact Us