Offices of Inspector General
Audit Update
Dr. Brett M. Baker
Assistant Inspector General for Audit
National Science Foundation
Kay Daly
Assistant Inspector General for Audit
Department of Health and Human Services
March 12, 2013
Presented by: Kay Daly

Overview of Office of Inspector General (OIG)

Five Components of OIG

Work Plan for 2013

- Colleges and Universities

Presence of OIG in Colleges and Universities

Audit Results

Revised Reporting Process
Mission - To protect the
integrity of Department of
Health & Human Services
(HHS) programs as well as
the health and welfare of
program beneficiaries.
Daniel R. Levinson, Inspector General

Established- 1976

Largest Inspector General's office in the Federal
Government - more than 1,700 employees

OIG's oversight:

All programs under other HHS institutions, including
the Centers for Disease Control and Prevention,
National Institutes of Health, and the Food and Drug
Administration.
Office of Inspector General
Office of
Evaluation
and
Inspections
Office of
Investigations
Office of
Management
and Policy
Office of
Counsel to
the Inspector
General
Office of
Audit
Services
Mission- To protect the integrity of HHS
programs, as well as the health and welfare
of beneficiaries, by conducting evaluations
that provide timely, useful, and reliable
information and recommendations to
decision makers and the public.
Mission- To protect the integrity of the
programs administered by the United
States Department of Health and
Human Services.
Mission - Identify and report ways to
improve, through a shared commitment
with management, the economy,
efficiency and effectiveness of
operations and services to beneficiaries
of HHS programs.
Gloria L. Jarmon
Deputy Inspector General for Audit
Services
Kay L. Daly
Brian P. Ritchie
Assistant Inspector General for Audit
Services
Assistant Inspector General for Audit
Services
Michael J.
Armstrong
Region I
James P.
Edert
Region II
Sheri L.
Fulcher
Region V
Patricia M.
Wheeler
Region VI
Stephen
Virbitsky
Region III
Lori S.
Pilcher
Region IV
Patrick J.
Cogley
Region VII
Lori A.
Ahlstrand
Region IX
http://oig.hhs.gov/


National Institutes of Health

College and University Compliance With Cost Principles

Equipment Claims by Grantees

Review of Extra Service Compensation Payments Made by Educational Institutions

Recharge Centers at Colleges and Universities

Cost Sharing Claimed by Universities
Cross-Cutting and Other Public-Health Related
Reviews

Reimbursable Audits

Requested Audit Services

Assess compliance of costs claimed based
on select cost principles issued by OMB
Circular A-21, Cost Principles for Educational
Institutions

Conduct reviews on the basis of:
 Dollar value of Federal grants received
 Input from HHS operating divisions and the offices of
Assistant Secretary for Financial Resources, and the
Assistant Secretary for Administration

Assess whether equipment purchases
over $25K complied with NIH Grants
Policy

Objective: identify unauthorized
changes in scope

Determine whether extra service
compensation charged to federally
sponsored grants, contracts, and
cooperative agreements:
 Complied with Federal Regulations;
 Were calculated properly; and
 Approved by the sponsoring agency.

Determine if specialized service facilities
(recharge centers):
 Have rate schedules that ensure that amounts
charged are reasonable, consistent, and comply
with Federal regulations; and
 Charge expenses that are reasonable and
necessary to function.

How are universities meeting cost sharing
requirements?

OMB Circular A-133 established cognizance Designated which Federal agency has primary
responsibility for audit of all Federal funds
received by an entity.


HHS OIG holds audit cognizance over all
State governments and most major research
colleges and universities.
HHS OIG received reimbursement for audits
that it performs on non-HHS funds.
Types of audits:
 Recipient capability audits;
 Contract and grant closeouts;
 Indirect cost audits;
 Bid proposal audits; and
 Other reviews designed to provide specific
information requested by management.
OIG is currently wrapping up two major types
of reviews:
 American Reinvestment and Recovery
Act (ARRA) grant audits; and
 Direct cost audits.
ARRA GRANT REVIEWS:






Rutgers University
Georgetown University
University of Central Florida
Thomas Jefferson University
Wayne State University
University of WisconsinMadison







Northwestern University
University of Texas- Health
Science Center
Iowa State
University of Utah
University of Washington-St Louis
Claremont McKenna College
University of Colorado
DIRECT COST REVIEWS:
Thomas Jefferson
University
 Florida State University
 Ohio State University
 University of TexasSouthwestern Medical
Center
 Dartmouth
 University of South Florida

University of Colorado,
Denver
 University of California,
San Diego
 State University of New
York - Albany
 State University of New
York - Stony Brook
 University of North
Carolina – Chapel Hill

•
•
•
•
•
Undocumented administrative costs
Cost did not solely benefit sponsored agreement
Admin costs improperly charged as direct costs
Clerical salaries improperly charged as direct
Extra Service Compensation – not provided for in the
sponsored agreement or approved by sponsoring
agency
Draft Report-Issued to Auditee
-Provided 5 days to
comment on audit
findings
Draft Report-Comments are
provided to OIG
-Auditors review and
summarize Auditee’s
comments
Draft Report- OPDIV comments are
provided to OIG
- Summarize all
comments
Draft Report-Issued to OPDIV with
Auditee’s comments
-Provided 30 days to
comment on
recommendations
Final Report-All comments are
attached as an appendix
Final Report-Addressed and Issued
to OPDIV
-PDF version provided
to the Auditee
Draft Report-Issued to Auditee
-Provided 30 days to
comment on audit
findings and
recommendations
Final Report-All comments are
attached as an appendix
Draft Report-Comments are
provided to OIG
-Auditors review and
summarize Auditee’s
comments
Final Report-Addressed and Issued
to the Auditee

Joint HHS-NSF OIG review of four universities

Demonstration Project on Time and Effort
Reporting
NSF OIG Update
30
NCURA FINANCIAL RESEARCH
ADMINISTRATION CONFERENCE
MARCH 12, 2013
Overview
31
 NSF Audit Planning
 Audit Analytics
 Federal Initiatives
Office of Audit
Office of NSF Inspector General
32
• Audit NSF-funded grants, contracts, and
cooperative agreements
• Determine whether claimed costs are
allowable, reasonable, and allocated properly
• Oversee annual audit of NSF’s financial statement
• Promote economy and efficiency in NSF’s financial,
administrative, and program operations
OIG Semiannual Report http://www.nsf.gov/oig/pubs.jsp
Audit Planning
33
Work Required by Law:
• Agency Financial Statement Audit (CFO Act)
• Federal Information Security Management Act (FISMA)
• Improper Payment Elimination and Recovery Act (IPERA)
• American Recovery and Reinvestment Act of 2009 (ARRA)
Other:
• OIG Risk-based Assessments
• Referrals from Investigations
• NSF Management Challenges
• National Science Board and NSF Suggestions
• Congressional Requests
Distribution of Audit Work
34
NSF Request
28%
OIG
38%
Required
8%
ARRA
18%
Cong. Request
8%
End to End Process for Grant Oversight
35
PRE-AWARD RISKS
ACTIVE AWARD 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
•
AWARD END
RISKS
•No /Late Final
Reports
•Cost Transfers
•Spend-out
• Financial
Adjustments
• Unmet Cost
Share
Data Sources
36
Internal
• Proposals: budgets, panel scores
• Agency award systems, recipient reporting
External
 Excluded Parties List System (EPLS)
 System for Award Management / Central Contractor Registration
 Dun and Bradstreet risk scores
 Tax filings and public records
 OMB A-133 Single Audit Act reports
 Recipient financial system records
 General ledger and subsidiary ledger(s)
 Property, travel, and purchase card
Identification of Questionable Costs
Phase I
Identify High Risk Institutions
Agency Award Data
Award proposals
Quarterly expense reports
Cash draw downs
Data Analytics
Continuous monitoring of
grant awards and recipients
External Data
A-133 audits (FAC)
D&B, Recovery Board
SAM/CCR, and EPLS
Phase II
Identify Questionable Expenditures
Agency Award Data
Award proposals
Quarterly expense reports
Cash draw downs
Awardee Transaction Data
General ledger
Subsidiary ledgers
Subaward data
Data Analytics
Apply fraud indicators to GL data
and compare to Agency data
External Data
A-133 audits (FAC)
D&B, Recovery Board
SAM/CCR, and EPLS
Review
Questionable
Transactions
Risk Assessment and Management
38
Identify systems and key processes
 Map out End-to-End Process
 Identify key controls
 Brainstorm Risk factors
Continuous Monitoring
 Set Objectives and Define Universe
 Build Targeted Business Rules, Run Against Data
 Examine Anomalies in Transaction-Level Data
Federal Initiatives and Coordination
39
Federal Initiatives
 Recovery Accountability and Transparency Board (RATB)
 Government Accountability and Transparency Board (GATB)
 OMB Grant Reform
Federal Coordination
 Council of Inspectors General for Integrity and Efficiency
 Federal Audit Executive Council
 Suspension and Debarment Working Groups
Recovery Accountability and
Transparency Board (RATB)
40
 American Recovery and Reinvestment Act 2009
 To provide transparency of Recovery-related funds
 To detect and prevent fraud, waste, and
mismanagement
 11 Inspectors General on the Board
 Sunsets on September 30, 2013
 Maintains websites for public information
- Recovery.gov
- FederalTransparency.gov
- EducationJobsFund.gov
Government Accountability and
Transparency Board (GATB)
41
 Apply lessons from Recovery Act oversight
 Support collection and display of government spending
data
 Build upon RATB capabilities and techniques
 Identify implementation guidelines for integrating systems
 Ensure the reliability of data
 Broaden fraud detection technologies
Members
5 Inspectors General:
- Education, NSF, HHS, Transportation, USPS
5 Agency representatives:
- OMB, HHS, Treasury, Defense, VA
OMB Grant Reform
42
To streamline the OMB circulars for
financial assistance oversight
• Cost compliance
• Administrative principles
• Audit monitoring and follow-up
Areas under discussion:
• Single Audit threshold and testing
• Annual time and effort reporting
• Cost accounting requirements
Questions?
43
Dr. Brett M. Baker, CPA, CISA
Assistant Inspector General for Audit
National Science Foundation
703-292-7100 bmbaker@nsf.gov