Dirty Deeds
What can we learn from recent audits and investigations?
Pamela A. Webb
Associate VP for Research Administration
Dramatic Increase in Major Audits
•
•
•
•
•
•
•
2007
2006
2005
2004
2003
2002
2001
??
19
13
7
2
2
0
CalTech, Vanderbilt, Georgia State, UMBC
Yale, Chicago, Columbia, Berkeley, Penn
Dartmouth, Cornell, Mayo Clinic, U Mass
Harvard, Johns Hopkins, U Washington
Northwestern
NSF in the midst of
30 “effort” audits
Recent Major Settlements
• 2006
$2.5M
U Connecticut – Service Center Billing Rates
• 2005
$4.4M
Cornell – Grant Money Paid to Non-Research Staff
• 2005
$6.5M
Mayo Clinic – Improper Cost Transfers
• 2005
$11.5M Florida International – Improper Cost Transfers
• 2004
$2.4M
Harvard – Grants Billed for Unrelated Salaries
• 2004
$2.6M
Johns Hopkins – Faculty Effort Reporting
• 2003
$5.5M
Northwestern – Faculty Effort Reporting
A-133 versus SAS-112
• A-133 – Many universities have had few A-133
findings, yet government auditors have found major
issues in these same universities
• SAS-112 – new accounting standard for
universities and non-profits that mirrors SarbanesOxley
– Lowers the threshold at which auditors must make official
findings
– Increases sample sizes
– Likely to increase reportable findings
HHS Audits Yale
• HHS Audit of Yale subaward to U Mass
Medical School
– Major signal about the responsibility to
monitor subrecipients
– Disallowed $194K of a $572K award
– Disallowed cost transfers, effort, cost
allocation methodology
But then …
NIH, DOD, and NSF Audit of Yale
• FBI agents visit faculty and staff at home and on
vacation to question them
• Subpoenas served on 47 grants from 13 departments
(many closed)
• Sample of Issues found:
Altered
Email!
– Allocation of expense not found to be reasonable
• no written documentation describing basis for allocation
• allocation done differently for supplies than equipment)
– Unsigned effort reports (costs disallowed)
– Emails saying things like: “Just zero out the grant”
– PI committed more effort than was charged (failure to
request prior approval for effort change)
– No procedures in place to monitor effort expended versus
committed
NSF Audit of Cal Tech
• Costs transferred from overexpended federal award to
an NSF grant
• Inaccurate and untimely substantiation of effort
• Current and Pending support information in NSF
proposals missing committed effort
• Payroll distribution system inadequate to track cost
sharing and to ensure costs are properly included in
F&A calculations (added to the research base)
NSF IG Audit of U of Penn
• Dept. administrators were certifying effort
without being in a position to know whether
the work was performed
• Effort reports weren’t certified in a timely
manner
• Dept. Chairs weren’t held accountable for
ensuring timely completion of effort reports
Criminal Penalties??
Recent Criminal Cases
• DOJ/NSF – U of Tennessee former
faculty member indicted and pled
guilty on one count of wire fraud and
one count of mail fraud
– Employees supported on a U of Tennessee Center NSF grant
were knowingly re-directed by the PI to work on a U of
Alabama Huntsville grant (same PI on both) but their costs
charged to the Tennessee grant
U of Vermont Scientist sentenced to 1 year and 1 day in jail for
fabricating more than a decade’s worth of scientific data, and using
it to obtain millions of dollars of NIH grants
http://www.nytimes.com/2006/10/22/magazine/22sciencefraud.html
Other Recent Audits of Interest
Georgia State
•
•
•
•
Personnel action forms not able to be located
Transfers made without explanation or source documentation
Coop agreement charged for work done on another grant
Georgia State didn’t follow its own policies and procedures
Brandeis University
• Administrative and Clerical Costs
– Text and reference books
– Trade Journals
– Supplies
Other Recent Audits of Interest
U of Hawaii
• $1.7M of unsupported labor cost-sharing
• Cost-sharing was based on estimated rather than actual
U of Arizona
• Inadequate documentation of payroll expense
• Could not locate time sheets for 18 out of 1132 transactions
New Mexico Highland U (NSF)
• Lack of adequate fiscal monitoring of subrecipients
• Purchase of supplies near end of grant
• Salaries and wages charged for someone not working on the
project
• Scholarship costs paid for students not eligible
• Lack of conflict of interest disclosures
• Lack of supporting documentation for cost-sharing
Other Recent Audits of Interest
(continued)
U of Maryland Baltimore County (NSF)
• UMBC didn’t always ensure that costs charged to NSF were
accurate, allowable, and allocable ($174K of $9.4M)
• Inadequate subrecipient monitoring of costs
• Inadequate monitoring of subrecipient cost-sharing
• No procedures in place to detect errors in F&A costs claimed
UMBC charged with developing a comprehensive subrecipient
fiscal monitoring plan, including reviewing cost sharing data and
supporting cost documentation from its subrecipients on a regular basis
U of Connecticut (NIH)
• Request to return $65K in connection with non-compliance
involving non-human primates on two grants
Other Hot Topics
(Get more information at the closing plenary session)
• NIH Conflict of Interest
– NIH Report:
•
•
•
•
•
http://grants.nih.gov/grants/policy/coi/TSR_Observations_2-14-2007.doc
No instances of intentional non-compliance
Confusion about Definition of “Investigator”
Confusion about Reporting
Confusion about requirement to report subrecipient COIs
OIG Report: www.oig.hhs.gov/oei/reports/oei-03-06-00460.pdf
• Deemed Exports
• Select Agents:
www.oig.hhs.gov/oas/reports/region4/40601033.pdf.