1. “Surviving an Audit” Al Willie, Office of Internal Audit 02.17.2009

2.  Share what Internal Audit looks at when planning and conducting a typical sponsored project audit  Review some of the more common audit findings from audits of the past 2 ½ years  Discuss “best practices” used by University units to manage sponsored projects

3. Financial Impact  award amount  $ amount of expenditures in the audit period Federal vs. Non-Federal  high priority given to federally sponsored projects Active Projects vs. Closed  almost always select active projects “Nature” of Expenses Are Considered  salary, equipment, travel, subcontracts, types of supplies are reviewed A typical audit of an academic department will include 2-3 sponsored projects; a college audit 3-4 projects

4. Eligibility of Project Personnel  FIRST/RCR training, chemical/radiation, human subjects, animals Unallowable Expenses  Administrative/clerical staff, postage, phone, photocopies, etc.  OMB Circular A-21 provides the general guidelines Compliance With Specific Provisions of the Sponsor or the Proposal  Cost sharing  Matching  Program income (properly accounted for & reported, correct method)

5. Effort Reporting  Ensure that salary is equal to effort certified  Timeliness of the certification process  Mandatory and voluntary committed cost share commitments are met  Effort decreases >25% are approved by the sponsor  PI has certified some effort on the project during the grant year reviewed  Effort commitments are being met  Cost sharing is not excessive  NIH salary cap compliance Human Subjects  Proper IRB approvals have been obtained  Consent form used is approved  Form signed by the participant and the person performing the consent process

6. Animals  IACUC approvals obtained  Purchases were made per University policy Subcontract Payments  Contract/agreement on file defining roles and responsibilities  Payments properly supported and made per the contract/agreement  Discuss with PI how progress is monitored and payments approved Technical Reporting to the Sponsor Transaction Testing  Sample of transactions charged to the project are selected and tested  All transaction types are considered  Cost transfers to sponsored project accounts are reviewed  Allowable and allocable  Proper coding and approvals  Timely processing  Proper justifications

7. 14 reports from July 2006 to January 2008 contained 49 Sponsored Project issues 11 reports from January 2008 to January 2009 contained 40 Sponsored Project issues  Effort Reporting Most Common ◦ Effort not certified or late ◦ Effort < proposed ◦ Effort ≠ payroll ◦ Salary > NIH salary cap ◦ Late HSAs 7/06 to 1/08 12 6 4 3 2 1/08 to 1/09 9 11 2 3 2

8.  Disbursement Policy Compliance ◦ Proper justifications ◦ Not processed timely ◦ Unallowable expenses ◦ Not properly approved ◦ Inaccurate object codes ◦ Allocability issues 7/06 to 1/08 9 8 6 4 0 1/08 to 1/09 6 5 4 5 0 4 2

9.  Human Subjects ◦ Consent form issues ◦ Subject payment procedures ◦ Inventory for items distributed ◦ Privacy/PHI 7/06 to 1/08 6 4 3 2 9 1/08 to 1/09 3 9 0 1  Sponsored Notification & Reporting ◦ Project delays, work scope changes, reduction in effort, change in key personnel, late technical reports, late invoicing to sponsor, no follow- up on uncollected $

10.  Cost Share ◦ Cost Share commitments not met or monitored ◦ Excessive Cost Sharing 7/06 to 1/08 2 1 0 1/08 to 1/09 4 3 2  Other ◦ Inappropriate cost transfers, REPA/ROC issues, subcontracts, record retention, poor controls over program income

11.  Ongoing tracking of PI effort to ensure effort commitments are being met  Periodic monitoring of match accounts to ensure the match amounts are being expended throughout the life of the project and are on target to meet the commitment  Others?

12.  Certified Approver program  Effort reporting by those with first- hand knowledge of the effort to be certified  Rigorous standards for cost transfers  Ongoing monitoring of project activities

13.  “Surviving an audit” shouldn’t be the goal; appropriate management of sponsored project funding should be  Being aware of the major risks facing sponsored project management, and developing processes and controls into your daily routines to address those risks, will make the audit process much easier and at the same time help minimize risks to the University

14. Internal Audit Website: http://www1.umn.edu/audit/Index.html http://www1.umn.edu/audit/Index.html