The Pasteur Principle: Chance Favors the Prepared Mind

1. The Pasteur Principle: Chance Favors the Prepared Mind How Best Practices for Managing Sponsored Projects Prepare for Audits

2. Michelle Melin-Rogovin Manager Research Administration, Office for Research;  Northwestern University Feinberg School of Medicine Melody Delfosse Information Team Manager, Northwestern University Accounting Services for Research & Sponsored Projects Your Presenters

3. Review the types of audits and how to prepare for them Learn about the relationship between research administration best practices and audit preparedness Discuss institutional roles and responsibilities for audit preparedness and support in the event of an audit Objectives

4. Northwestern University • 2500 Faculty • 3 Research-Heavy Schools on 2 Campuses • 20 Interdisciplinary Research Centers • $550M Per Year in Sponsored Awards

5. Site visit Assessing whether the site is suitable for the research Can include observing facilities, interacting with staff and students, accessing documentation Desk audit Systematic review of documents and materials provided by institution under audit Can be on campus or conducted via email, phone, or video conference Investigation A review prompted by a potential misconduct Types of Audit

6. Internal audit department External auditing firms Federal Office of Inspector General (OIG) State or local government Institutions that issue sub-awards Any agency that issues awards Who Conducts the Audit?

7. OMB Circular A-133 requires an annual external audit of non-profit organizations expending more than $500,000 in federal funds Viewed as a ‘report card’ of how the University spends their money Findings are reported to the federal government, become public record, and are distributed to all federal agencies through a clearinghouse The A-133 Audit

8. Internal control testing • Benefit of expenditures to the grant • Effort reporting • Cost transfers • Program income eligibility • Sub-recipient monitoring • Key personnel • Indirect cost and fringe benefit rate application • Equipment and real-property management • Service centers • Student financial aid A-133 – What is Tested?A sample of federal awards and their direct cost transactions are selected for testing to determine if expenditures and procedures are appropriate

9. Appropriateness of direct charges Cost transfers Subrecipient monitoring Effort reporting accuracy and timeliness Proof of payables Equipment management Timeliness of technical and financial reports Administrative cost Audit Trends

10. OIG Desk Audit of ARRA Funds The works Dept. of Energy Site Visit Equipment walk through, faculty and staff interviews, programmatic review NSF Desk Audit Review of expenditures reported on FFR Dept. of Justice Sub-recipient monitoring, administrative salaries, programmatic review, validity of expenditures Recent Audits at Northwestern

11. Before meeting with auditors, resolve issues and be prepared to justify and support anything unusual Audits can occur at any time, so be prepared to allocate staff time for audit prep Continually update and review policies, roles & responsibilities documents, and process documents Do cost to risk analysis of central roles to determine what must be reviewed prior to a transaction vs. what can be post audited If there are findings, you may need to hire consultants to add credibility Central Office Preparedness

13. Examples from Northwestern Spending can only occur on open budgetary accounts opened by pre-award office based on award terms and conditions. Some items in restricted categories include: • Office supplies • Administrative salaries • Books • Tuition • Stipend • Capital equipment • Consulting • Subcontracts • Animals and animal care • Human subjects Budgeting as a control

14. Examples from Northwestern PeopleSoft workflow is configured to send research accounting office high risk purchase requests for approval Capital equipment Consulting Subcontracts Travel If total request is $2,500+ Items charged to unusual expense accounts like indirects, payroll or tuition Approve High Risk Transactions

15. Examples from Northwestern Prior to award closeout, research accounting office: Verifies effort certification is complete and valid Reviews expenses for unallowable costs Validates that indirect costs were charged appropriately Insures subcontracts are finalized Obtains PI certification attesting to validity of final expenses Accounts for all program income Detailed Review at Closeout

16. Department And School Level Preparedness

17. FEINBERG SCHOOL OF MEDICINE Disseminates, promotes and implements consistent adherence to university policies and business practices Develops structures, policies and roles that respond to the unique risk environment facing biomedical researchers Human subjects/animal research Financial Conflict of Interest in medical research Complexity in research administration environment Actively engages with University and affiliate organizations affecting its audit environment to proactively manage research activities and address issues. School Level Audit Preparedness

18. Provides cradle to grave research administration services to 14 medical school departments. (95 investigators, $30M+ portfolio) Provides training and education to staff on how to manage sponsored projects (financial management, compliance, how to work with PI’s) Provides assistance when problems are discovered with accounts that need to be fixed and documented with the sponsor. Supports the PI and department in the event of an audit. Research Administration Services

19. 12research administrators and financial administrators work directly with investigators and staff in departments to promote best practices Financial Management of sponsored projects Tracking prime project and subcontractors A21-driven best practices to manage allocation of costs to sponsored projects Compliance management behaviors Meetings with PI’s – regular reporting Salary and effort management best practices Bridge people in central offices and school level offices with people working in departments to overcome barriers, and maximize understanding and successful outcomes Research Administration Services

20. Sponsored Research Administration Best Practices: Direct Charging Within 90 days Reconciliation Timely Reporting Internal – PI External – Progress Reports, FFRs Effort Documentation Support your activities Document your decisions (at every level) Communication Meetings with PIs Department Business Administrators Subcontractors Department Level Audit Preparedness

21. Allows the research administrator, business administrator and PI to manage position funding across all sources of activity Dynamic document that manages salary and effort together – as related concepts. Presented by source of funding for non-financial types, with financial checks Reconciled and updated when effort is proposed and certified, clinical commitments change, and research ends and begins. (VIEW SALARY AND EFFORT MANAGEMENT TOOL) Salary and Effort Management Tool

22. Examines the status of a sponsored project by month, by year for the project year (by account code open for the project). Provides rolling account balances for each year of the project and total account balances for the status of the project (carry forward). Provides expenses to budget for the project year. Answers the main questions PI’s ask: How much have I spent this month? This year so far? Am I over or under my budget? Has this expense been paid? Serves as a reconciliation tool for the research/financial administration team. Can be used to roll up summary portfolio data for the PI. Multi-project data can be presented in table format Pivot tables and summaries provide key data. (VIEW FINANCIAL TRACKER) Project Financial Tracker

23. Set up systems to review projects with PIs and obtain feedback/signatures from investigators. Review your institution’s documentation retention policies and determine if your unit is following them. Utilize current systems to “capture” documentation of decisions that will assist compliance without adding burden to process. Three Things You Can Do Now

24. Public Perception Reality As long as the disconnect Exists, We will be Audited