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1. National Council of University Research Administrators FRA IX Conference 2008
Surviving an AuditNCURA FRA ConferenceNew Orleans, Feb. 2008 Introduction: JillIntroduction: Jill
2. National Council of University Research Administrators FRA IX Conference 2008
Gail McDermott
Director, Risk Management & Audit Services
HarvardUniversity
Jill Mortali
Director, Sponsored Programs Administration
Harvard Medical School
Amy Miarecki
Director of Post-Award Administration & Compliance
Office of Financial Services
University of Massachusetts Medical School
Introduction Jill Introduction Jill
3. National Council of University Research Administrators FRA IX Conference 2008
Audit Survival Skills 101 Good business practices
Sound Documented policies
Good documentation
Discretion
Diplomacy Introduction JillIntroduction Jill
4. National Council of University Research Administrators FRA IX Conference 2008
What we will cover Types of audits
Good business practices
Preparation
Notification
Negotiation
Scoping
The Audit
Interviews, involving the faculty and others
Field work
Reviewing the facts
Close-out, Reporting
Responses
Settlements
Lessons learned
Introduction JillIntroduction Jill
5. National Council of University Research Administrators FRA IX Conference 2008
The Impact of Non-Compliance Introduction JillIntroduction Jill
6. National Council of University Research Administrators FRA IX Conference 2008
Types of Audits Annual A-133 audit
Sponsor audit (NIH, AHA, RWJ)
Office of the Inspector General (OIG) not for cause and for-cause
F&A Review
7. National Council of University Research Administrators FRA IX Conference 2008
A-133 Audits - WHY
An Office of Management and Budget (OMB) Circular requires an annual external audit of non-profits receiving federal funds for sponsored programs in excess of $500k (as of 12/31/03)
Audit performed by external auditor, sometimes with support from an internal audit group
Gail
OMB is the Office of Management and Budget arm of the government that oversees the budget and issues information and instruction to Federal agencies- called circulars- that apply to using federal funds. This is required, not optional.Gail
OMB is the Office of Management and Budget arm of the government that oversees the budget and issues information and instruction to Federal agencies- called circulars- that apply to using federal funds. This is required, not optional.
8. National Council of University Research Administrators FRA IX Conference 2008
A-133 Audits - WHAT OMB Circular A-110
The Federal awarding agencyor any of their duly authorized representatives, have the right of timely and unrestricted access to any books, documents, papers, or other records of recipients that are pertinent to the awards.
This right also includes timely and reasonable access to a recipient's personnel for the purpose of interview and discussion related to such documents.
GailGail
9. National Council of University Research Administrators FRA IX Conference 2008
A-133 Audit - HOW Interviews
Questionnaire
Testing - Sample of federal awards & their direct cost transactions are selected for audit to determine if expenditures and procedures were appropriate (i.e., in accordance w/ federal policies, sponsor terms/conditions & University policies)
10. National Council of University Research Administrators FRA IX Conference 2008
A-133 Audit HOW continued Audit scope includes:
effort reporting
internal control testing
cost transfers
program income
equipment testing
financial & non-financial reporting
sub-recipient monitoring
Davis-Bacon Act
service centers
student financial aid
F&A rate application GailGail
11. National Council of University Research Administrators FRA IX Conference 2008
Common A-133 Findings Unallowable costs charged to grants
Sales tax, travel
Timely and Accurate Annual Financial Reporting
90 calendar days after the end of the grant year
In FY 03, 5 reports were late out of a selection of 30
Timely and signed Effort Reporting
Evidence of timely review by someone with first-hand knowledge
Cost Transfers
Timeliness, justification, authorization
GailGail
12. National Council of University Research Administrators FRA IX Conference 2008
F & A Audits What
DHHS or ONR review of a Universities proposed F&A (indirect cost) rate proposal
Why
To test/verify the data that supports the proposed F&A rate
Who
Staff from the cognizant agency (DHHS, ONR)
When
Based on submission of F&A proposal and type of F&A rate (provisional, predetermined, fixed with carryforwards) AmyAmy
13. National Council of University Research Administrators FRA IX Conference 2008
F&A reviews are looking to F&A proposal reconciles to the audited financial statements
Compliance with OMB Circular A-21
Compliance with Disclosure Statement
Reasonableness of costs incorporated into the F&A proposal
Review the accuracy of the space use survey to space functions
Ensure the space and base match
14. National Council of University Research Administrators FRA IX Conference 2008
Sponsor Audits Drivers:
Sponsors are accountable too.
Foundations: Donors
Federal agencies: Congress, taxpayers
Not for cause audits
Verification of costs charged
Specific concern e.g. charging administrative salaries
Not always financial e.g. conflict of interest process
For cause audits
Self-reported
Whistleblower
15. National Council of University Research Administrators FRA IX Conference 2008
Office of Inspector General Audits What
DHHS or ONR Inspector General
Why
To protect the integrity of DHHS and ONR programs, as well as the health and welfare of the beneficiaries of those programs
Who
Staff from the Office of Audit Services at the cognizant agency (DHHS, ONR)
When
Random but you will know long before they get there AmyAmy
16. National Council of University Research Administrators FRA IX Conference 2008
Some recent OIG findings. Direct charging of costs that should have been included as indirect costs
Direct charging salary for effort associated with grant proposal writing
Improperly authorized and documented cost transfers
Inadequate subrecipient monitoring procedures
Costs charged were not compliant with A-21
17. National Council of University Research Administrators FRA IX Conference 2008
Audit Preparation Good business practices
Sound policies
Good documentation
Notification
Negotiation
Scoping
GailGail
18. National Council of University Research Administrators FRA IX Conference 2008
Good Business Practices = Sound Internal Controls A process designed to provide reasonable assurance objectives are achieved:
Compliance Objectives compliance with all legal, regulatory and policy requirements
Operational Objectives efficient and effective operations, safeguarding of assets, HR practices to hire quality personnel
Reporting Objectives- Accurate and complete financial reports
Example:
Objective: Compliance with sponsor regulations and University policies
Internal Controls:
Approval of spending separate from person doing the transaction
Monthly review of expenses transacted (detailed listings)
Post audit for unusual transactions
Routine monitoring of spending in high risk areas
GailGail
19. National Council of University Research Administrators FRA IX Conference 2008
Components of Internal Control There are five interrelated components of internal control derived from basic operations and administrative processes. The control environment is at the bottom because it is the foundation for all the others.
GailGail
20. National Council of University Research Administrators FRA IX Conference 2008
Auditors look for: Established policies and procedures
Allowability, allocability and consistent practices over direct cost transactions
Effort commitments & deviations
Effort Reporting compliance
Subrecipient Monitoring
Cost Transfers supported
Documented Cost sharing
21. National Council of University Research Administrators FRA IX Conference 2008
Keys to Successful Audits Organized Files
Documentation for expenses including business descriptions that show benefit to the award
Appropriate Approvals
Audit Trails
Knowledge of policies and regulations (administrators and PIs)
22. National Council of University Research Administrators FRA IX Conference 2008
Good Business Practices Help the PI manage the resources of the project to support timely and successful closeout of the project.
Monitor expenditures on award funds; understand spending in the context of project milestones
Keep abreast of regulations and policies
Coordinate with PI and Central Offices on reporting; review all reports to be submitted to the sponsor
Assist PI in compliance with regulations and policies
Know when prior approvals are required or know when to ask
Assist central administration with closeout and audit activities
DOCUMENT!!!!!!
23. National Council of University Research Administrators FRA IX Conference 2008
Roles and Responsibilities Liaison person for managing the auditors
Internal communication strategy who, when, how
Negotiator and response team
Trainers - especially for those who might be interviewed
24. National Council of University Research Administrators FRA IX Conference 2008
Scoping and Negotiation Define the purpose of the audit.
Focused on all compliance areas no specific concern
Specific concern e.g. PI effort or effort reporting
Monitor work for consistency with purpose
Obtain a written understanding on key points in advance:
Start date, duration
Awards selected
Number and type of transactions
Documentation to be submitted in advance of visit?
Status updates
Closeout process
25. National Council of University Research Administrators FRA IX Conference 2008
Fieldwork The Nitty Gritty
Interviews, involving the faculty and others
Documentation
Reviewing the facts
Discretion
Diplomacy
26. National Council of University Research Administrators FRA IX Conference 2008
Audit Closeout process Closing meeting between institution and auditor
Audit report draft to University
University response
Negotiation of audit issues
Final Audit report issued
Higher level review & University response
Final resolution and settlement
27. National Council of University Research Administrators FRA IX Conference 2008
To sum it up