Audit’s Role in Sponsored Programs
Agenda:
•Who we are
•What we do
• Why so much focus on Sponsored
Programs?
•What to do if an “Auditor” calls
•Policies related to Sponsored
Programs
•Contact information
Cornell University Audit Office
Hunter Rawlings
President
Audit Committee
Board of Trustees
Stephen T. Golding
Executive Vice President for
Finance and Administration
Michael B. Dickinson
University Auditor
Kathryn A. Tholen
Administrative
Assistant
Pamela A. Doran
Associate Audit Director
Jason T. Sanford
Senior Auditor
Renee M. Kenney
Staff Auditor
Maggie Liu
Staff Auditor
Robert C. Beveridge
IT/Financial Senior
Auditor
Craig R. Adams
Assistant Audit Director
Information Technology
Clayton A. Dow
IT/Financial Senior
Auditor
Geoffrey Yearwood
Senior IT Auditor
Peter H. Pergolis
Assistant Audit Director
Weill Medical College
Robert P. DiPalma
IT/Financial Senior
Auditor WMC
Amy Lindert
Senior Auditor
WMC
Kevin M. Reilly
Senior Auditor
WMC
What does the University Audit Office do?
• Support the mission of the University by
helping protect its assets and reputation.
• Provide objective assurance and advice to
University management and Board of
Trustees.
• Review operations and controls, provide
analyses, recommend improvements and
promote ethical behavior and compliance with
policies and regulations.
What are Internal Auditors looking for?
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Efficient and Effective Control Environment
Compliance with university policies and procedures
Compliance with laws and regulations
Compliance with award terms and conditions
Best Practices!
Why so much focus on Sponsored Programs?
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Top 3 Risks in University Audit
Office Risk Assessment
Consequences of Noncompliance (Headlines)
Regulations create inherently
high risk environment
Major Source of University
Revenue
University Audit Office Risk Ranking Results
Ithaca Campus (Top 3)
1)
Research & Sponsored Programs
2)
Animal Use in Research
3)
Human Subject Use in Research
Consequences of Non-Compliance
Fines, Penalties, and Repayments to Federal Government by Universities in the
Recent Past:
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University of Minnesota - $32 million fine and loss of FDP expanded authority
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Florida International University - $27 million for effort reporting violations and
unallowable charges
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NYU Medical Center - $15 million for inflated research grant costs
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Thomas Jefferson University - $12 million for unallowable charges
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Northwestern - $5.5 million for effort reporting violations
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Cornell (Weill Medical College) - $4.4 million settlement on allegations primarily
relating to effort reporting
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University of South Florida - $4 million for charging clerical costs without
justification, purchase of equipment after project had ended, etc.
Consequences of Non-Compliance
Reputation – all of the following examples resulted in negative
press for the institutions involved which had an adverse effect
on their reputation.
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Michigan State – case involving conflict of interest case
involving an anti-cancer drug which brought the university
more than $160 million in royalties.
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Boyce Thompson Institute – case involving research integrity
where the PI falsified research documents resulting in 2 year
debarment.
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University of Pennsylvania – case involving the health and
safety of human subjects where a participant in an
experimental gene therapy trial died.
Regulations
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OMB Circular A-21 – Cost Principles for Educational
Institutions
OMB Circular A-110 – Uniform Administrative Requirements
for grants and other agreements with Institutions of Higher
Education
OMB Circular A-133 – Audits of States, Local Governments,
and Non-profit Organizations
Sponsored Revenue
(Extracted from FY05 Financial Statements)
(In Thousands)
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Federal Grants and
Contracts $447,644
State and Local Grants and
Contracts $29,102
Private Grants and Contracts
$32,397
Total Grant and Contracts =
20% of Total Revenue for
FY05 $2,546,292
What to do if an “Auditor” calls
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IMPORTANT – Sponsored Program Services and/or
University Audit must be contacted prior to the
commencement of an external audit and/or review
(including Agency Accounts).
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Beware of any request for information from an external party,
it may be an audit “in disguise”.
Contacts
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University Audit Office, Pam Doran (5-9300)
Sponsored Program Services, Jeff Silber (5-2016)
Types of External Auditors
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Certified Public Accountants provide assurance that the
university’s financial statements fairly represent its financial
condition and perform the A-133 audit (KPMG).
Government auditors come from federal and state sponsoring
agencies such as NSF, USDA, HHS and NYS Ag & Markets,
as well as regulatory bodies, such as the EPA, IRS, and NYS
Sales Tax.
Some sponsors will hire public accounting firms to perform
reviews for them.
A-133 Audit
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Required for non-profit organizations which spend $500,000
or more (in a given year) in total federal funds (including passthrough funds).
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Performed by a public accounting firm or government auditor
(KPMG for Cornell).
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Resulted from the Single Audit Act of 1984 and sets forth
standards for obtaining consistency and uniformity for audits
of non-profit organizations expending Federal awards.
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Reports are public knowledge – published on the Federal
Audit Clearing House.
 Reportable Conditions typically prompt inquiries and/or
audits from the cognizant agency or sponsoring agencies.
Relevant University Policies
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Cornell University Policy 1.1: Cost-Sharing
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Cornell University Policy 1.4: Care and Use of Animals in Research and Teaching
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Cornell University Policy 3.6: Financial Irregularities
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Cornell University Policy 3.8: Program Income from Sponsored Projects
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Cornell University Policy 3.9: Capital Assets
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Cornell University Policy 3.10: Recharge Operations and Service Facilities
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Cornell University Policy 3.11: Effort Planning and Confirmation
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Cornell University Policy 3.13: Graduate Tuition
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Cornell University Policy 3.18: Charging Directly to Sponsored Projects Costs that are
Normally Considered Indirect
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Cornell University Policy 3.20: Cost Transfers on Sponsored Projects
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Cornell University Policy 4.7: Retention of University Records
Additional Resources Available
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OMB Circulars http://www.whitehouse.gov/omb/circulars/
NSF http://www.nsf.gov/
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Grant Proposal Guide
Grant Policy Manual
Federal Demonstration Partnership (FDP) Terms and Conditions
NIH Grants Policy Guidance http://grants2.nih.gov/grants/policy/policy.htm
Department of Health and Human Services-Cornell’s Cognizant
Agency http://www.hhs.gov/
NCURA (National Council on University Research
Administration) http://www.ncura.edu/
COGR (Council on Governmental Relations) http://www.cogr.edu/
Contacts
Audit Office: 255-9300
email: audit@cornell.edu
Web Page: http://www.aff.cornell.edu/audit/
Hot Line: 1-866-293-3077
Website Link available from:
http://www.aff.cornell.edu/audit/
http://www.cuinfo.cornell.edu/
Questions