1. Results of NSF Data Analytics and Other Audits
Carol Malkemus, Director of Sponsored Projects Accounting
March 27, 2019

2. NSF Data Analytics Audit
UT received notification from NSF Office of Inspector General on July 27, 2016
Audit finalized and published as of March 13, 2019
959 days!
005_University_of_Tennessee_Knoxville.pdf

3. NSF Data Analytics Audit - Statistics
Compiled and submitted three years of financial and human resources data for the time period of July 1, 2013 through June 30, 2016
Over 117K financial transactions
Nearly 119K payroll data
Period of review contained
63 letters of credit draws
283 awards that included nearly 570 WBS elements
Expenditures totaled $102M

4. NSF Data Analytics Audit - Timeline
Submitted Data in September 2016
October/November 2017 – received requests for 250 documents
200 financial documents
50 payroll documents
November 28, 2017 through December 1, 2017 – site visit from NSF and Moss Adams
Discovered the 250 documents were considered outliers thus requiring further support for the justification for the expenditures

5. NSF Data Analytics Audit – Types of Transactions Questioned
Payroll Transactions:
Service awards
Salaries that appeared to exceed budget
Terminal leave
Moving allowance
Additional Pay

6. NSF Data Analytics Audit – Types of Transactions Questioned
Financial Transactions:
End of award expenditures
Conference related expenditures
Subaward cost posting after award ended
Participant support costs
Equipment costs

7. NSF Data Analytics Audit – The Results
December 20, 2018 – UT received draft audit report
4 Audit Findings
7 expenditure disallowances
One “Other Matter”
Total amount to be returned - $34,094

8. NSF Data Analytics Audit – The Results, Finding #1
Charges Not Fully Supporting the Award During the Award Period
Expenditure: an annual maintenance agreement in which the period of performance ended after four months into the maintenance agreement
NSF Response:
Office of Management and Budget (OMB) Circular A-21, Section C.4.a states, “A cost is allocable to a particular cost objective ... if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship.” As approximately 8 months of the maintenance contract occurred outside the award period, it is not considered to be allowable to the award.
UT to return $14,282

9. NSF Data Analytics Audit – The Results, Finding #2
Unallowable Costs and Service Awards
This finding involved 4 separate transactions all payroll related
Service awards
Moving allowance
NSF Responses
OMB Circular A-21, Section C.4.a., states, “A cost is allocable to a particular cost objective … if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship.” As such, each of the service awards mentioned above have been deemed unallowable.
Pursuant to NSF’s 2013 Proposal and Award Policies and Procedures Guide, Chapter V subsection C, Part 4, relocation costs are allowable if the proposal indicates that the grantee intends to hire a named individual who is essential to the project on a full-time basis for a continuous period of 12 months. As there was no indication in the proposal that the University intended to hire anyone, the cost is unallowable.
UT to return $11,528

10. NSF Data Analytics Audit – The Results, Finding #3
Late Charges to the Award
Expenditure: Lab supply that was not received until 10 days before the end of the period of performance
NSF Response:
Allocability is a key factor when determining whether a cost should be charged to a sponsored agreement. OMB Circular A-21, Section C.4.a., states, “A cost is allocable to a particular cost objective … if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship.” We question this $6,675 claim that provided no benefit to the award to which it was charged.
UT to return $6,675

11. NSF Data Analytics Audit – The Results, Finding #4
Unallowable Cost Transfer
Expenditure: Lab supply purchased on a sponsored project and transferred to the NSF award after the award ended. This purchase was to replace a lab supply that was borrowed from another project.
NSF Response:
OMB Circular A-21, Section C.4.a., states, “A cost is allocable to a particular cost objective … if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship.” Since the in question did not benefit the award to which they were charged, we question $1,609 of direct and associated indirect costs.
UT to return $1,609

12. NSF Data Analytics Audit – The Results, Other Matter
Late Effort Certification
This was not considered a questioned cost, but a deficiency in our internal controls, thus was not considered an audit finding.
NSF Recommendation:
Strengthen our controls to ensure adherence to UT’s internal fiscal policy.

13. NSF Data Analytics Audit – UT’s Response to the Audit Findings
Enhance our training program to include these situations as case studies and providing guidance on best practices.
Service awards – SPA is now part of the workflow approval process for all requests for services awards to be charged to a sponsored project WBS element.
Moving allowance - SPA is now part of the workflow approval process for all requests for services awards to be charged to a sponsored project WBS element.
Review our fiscal policies to address our weakness of internal control for effort certification.

14. State of Tennessee – Uniform Guidance Single Audit
Audit Finding:
Equipment purchase did not have prior approval from Sponsor as per Uniform Guidance
Purchase of computer did not have prior approval as per UT’s Fiscal Policy – FI0206 Sponsored Projects – Distinguishing Direct vs Indirect Costs
UT did receive after-the-fact approval, but because the expenditures originally posted without prior approvals, a finding was issued.
UT Response:
Equipment Purchases – (coming soon) procedures requiring that prior to posting equipment expense to a sponsored project WBS element, the sponsor approval/budget justification must be attached in IRIS
Computer Purchases – review fiscal policy FI0206 Sponsored Project – Distinguishing Direct vs Indirect Costs

15. State of Tennessee – Annual R&D
Other Noted Item:
Expenditures posting more than 60 days outside of period of performance as noted in fiscal policy FI0205 Sponsored Projects
Expenditure noted for UTK was for subrecipient payments
UT Response:
UT will review fiscal policy FI0205 Sponsored Projects
This will become a future audit finding

16. Other Sponsor Audits/Program REviews
Site visit from Federal Agency, March 2019
No official report yet received, but noted the potential issues:
Late technical reports
Special award conditions were missed
Internal Audit
Conducting data analytics audits – reviewed equipment purchases within 90 days at the end of the period of performance.
Expect to see more reviews.

17. Questions & Comments